Market Watch: March Job Report Worse than Expected Amidst Looming Recession
On Friday, the U.S Bureau of Labor Statistics reported that nonfarm payrolls declined by 701,000 in March due to the global coronavirus economic shutdown. This was the first plunge in jobs since 2010 and did not show the full economic impact of the containment efforts to slow the spread. Wall Street tumbled immediately after the report was released, and closed down -1.69%. The S&P 500 dropped -1.53%, and NASDAQ fell -1.53%.
Bryan Solomon, an Associate Producer for Fox Business Network, shared his take on Friday's report with Marist Circle — and how beginning quarter two in a crisis economy will have a significant effect on the 2020 presidential elections.
"Today's job report shows a surprisingly bad state of our current economy,” Solomon said. “The number of unemployed was larger than expected, and that doesn't include the last two weeks where many of the layoffs and furloughs occurred."
““The number of unemployed was larger than expected, and that doesn’t include the last two weeks where many of the layoffs and furloughs occurred.””
The unemployment rate jumped from 3.5% in Feb., to 4.4% in March, with a decline of labor force participation rate to 62.7%, which only showed job losses up until March 14, not including the past two weeks when over 10 million people filed for unemployment insurance. The report showed the first glimpse of an economic collapse resulting from the U.S. COVID-19 cases surpassing 1 million globally, with death counts over 50,000.
This week, major banks warned investors of their predictions of damage the coronavirus will cause, being the deepest recession in history, worse than the post-war average. Goldman Sachs predicted the U.S. estimated growth of GDP to decline -6.2%, and strict containment measures have the potential to push growth downward -9%. Banks continue to forecast the massive impact of the pandemic reassuring the virus will strike a recession inevitably.
This was the first plunge in jobs since 2010 and did not show the full economic impact of the containment efforts to slow the spread. Wall Street tumbled immediately after the report was released, and closed down -1.69%. The S&P 500 dropped -1.53%, and NASDAQ fell -1.53%.
March numbers depressed confidence on Wall Street; however, the federal government reported an increase of 18,000, following the hiring of 17,000 workers for the 2020 Census. Solomon shared that there are some positives to analyze in today's numbers.
"Bright spots to look at: the government added more workers in March than any other sector, and that doesn't include the thousands of jobs they are now hiring for to carry out the CARES Act," he said. "That will help keep many people afloat as many of those jobs are remote. Also, thousands of medical professionals are now in the workforce that wasn't there last month."
The coronavirus disintegrated the addition of 6.7 million jobs added under President Trump's term of economic prosperity for Americans, ending the longest U.S. economic expansion in history, and stepping into recession territory. A CNN poll reported before the virus outbreak in the U.S., the economy had the best rating seen in 20 years, with a low unemployment rate of only 3.6%. Individuals will likely take an even more tremendous hit in the coming months, and with elections near voters can be swayed by which candidate will rescue their pockets and save their jobs.
“A CNN poll reported before the virus outbreak in the U.S., the economy had the best rating seen in 20 years, with a low unemployment rate of only 3.6%. Individuals will likely take an even more tremendous hit in the coming months, and with elections near voters can be swayed by which candidate will rescue their pockets and save their jobs.”
"As this continues, it will create a larger impact on each individual, close to the levels in 2008. That will have major implications in November as voters will now be looking at which candidate can bring them back to where they were just last year, reminiscent of 2016,” said Solomon. "Key point to remember — since 2016, mutual funds, 401(K)s, and other retirement funds have been on a tear."
Ther coronavirus has shifted the markets drastically; in the past few weeks, despite the millions of unemployment insurance claims, investors remained optimistic in today's bear market. Americans saw losses this month far above predictions, and the data to come will show the COVID-19 acceleration phases impact on the Americans.
Solomon said, "We'll see how the recent unprecedented success in the markets can buoy many Americans during this crisis."