Trump expects a sharp bounce-back in jobs. But as bankruptcies pile up, the labor market will need much of the next decade to replace the jobs gone for good.
The U.S. economy is sitting in its deepest hole since the Great Depression, with more than 33 million Americans losing their jobs in just seven weeks and an unemployment rate now at 14.7 percent — and likely to rise to around 20 percent — under the weight of the coronavirus pandemic.
It’s likely to take years, perhaps even much of the next decade, to dig out.
President Donald Trump is agitating for a rapid reopening of the U.S. economy to help reverse the damage quickly, hoping a swift bounce back would boost his reelection prospects in November. But the recovery is likely to be weighed down by severe damage to the private sector and a resistance to returning to the old normal, keeping the jobless rate still near 10 percent — the high of the Great Recession — by the end of 2021, a year into the next presidential term in office.
Some of the retail jobs are clearly not coming back.
The Congressional Budget Office, which produces nonpartisan research on economic and fiscal conditions, projects that while the jobless rate will start declining by the fourth quarter of this year, it will remain at 9.5 percent at the end of 2021 and that 6 million people will have exited the labor force entirely by then. During the Great Recession sparked by the global financial crisis, unemployment peaked at 10 percent in October 2009.
The official April jobs report showed a loss of 7.7 million in leisure and hospitality, 2.5 million in education and health services and 1.3 million in the arts, entertainment, and recreation industry.
Professional and business services shed 2.1 million jobs in April. Manufacturing employment dropped by 1.3 million and retail trade declined by 2.1 million. Average hourly earnings increased by $1.04 to $25.12 in April. But that largely reflected the massive loss in low-paid jobs and did not suggest a real, sustainable gain in earnings.
According to the April report, the labor force participation rate declined by 2.5 percent to 60.2 percent, the lowest rate since January 1973.
For Trump and the White House, it means they may have to fight a reelection battle with numbers that may have bottomed out but not improved all that much. “The economic recovery will not be like a rocket ship, as the president likes to say,” said Zandi. “It will be more like a truck that got stuck in the mud — at least until there is a vaccine.”