In This Week’s Brief |
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Market Notes |
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April Jobs Report Dire but Understates Economic DamageThe jobs report released by the Bureau of Labor Statistics (BLS) on Friday puts the unemployment rate at 14.7%, the highest level in decades. The BLS noted, however, that large numbers of people appeared to have misstated their status and that the actual unemployment rate is in fact closer to 20.0%. It is BLS policy, however, not to restate this data even when large anomalies are discovered. As bleak as the April jobs report was, however, Federal Reserve Bank of Minneapolis President Kashkari believes, “the worst is yet to come on the job front, unfortunately.” The BLS derives employment figures from surveys conducted before the middle of the month, and unemployment claims have continued to mount since then, albeit at a decelerating pace. Although unthinkable just a few weeks ago, the high unemployment estimate still fails to capture the full breadth of economic distress across the U.S. economy. The official unemployment rate is based on the “U-3” data, but it does not include (1) discouraged workers who have given a job-market related reason for not looking for work, and (2) people who are employed part-time purely for economic reasons (i.e. had hours cut back). These are included in the “U-6” data, shown below.The “U-6” Chart: Historical Unemployment and Underemployment as a Share of the Labor Force ![]() |
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Job Losses No Longer Limited to One Corner of the EconomyWhile the March jobs report indicated job losses up to that point had been largely limited to leisure and hospitality, it is clear from the April report that every sector of the economy is now feeling the pain of the COVID crisis. Sectors where remote work is more likely to be feasible, such as financial activities and information, experienced the fewest—but still sizeable—job losses. Even government, which is typically more resilient to a downturn, has seen total employment fall by 4.4%, largely as a result of school closures.Percentage Change in Employment by Industry since February 2020 ![]() |
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Gen Z and Younger Millennials Bearing the Brunt of Job LossesAs the economic slowdown deepens, the outsized toll of the COVID crisis on younger workers is beginning to come into focus. A survey by the Pew Research Center conducted in mid-April found that people between the ages of 18 and 29 were the most likely to report that someone in their household had lost a job as a result of COVID-19. They were also the most likely to say someone in their household had seen their hours reduced or wages cut. Young adults’ worsening economic situation could cause household formation to slow through the crisis, which would dampen demand for new housing in the short-term. The share of people in their late 20’s living with their parents surged after the Global Financial Crisis (GFC) as it became more difficult for younger workers to obtain decent-paying jobs, rents increased, and marital rates dropped.
Number of Young Adults (18-34) Living at Home (in thousands) ![]() |
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The Weekly Briefing - May 11th, 2020
The Weekly Briefing – May 11th, 2020
Insights from the Bridge Research team.