Coronavirus shut down leads to many crises including job loss. The president of St Louis Fed James Bullard said on Wednesday after the report came from a payroll company ADP that showed 20.2 million jobs cut down by US businesses that is an extremely unprecedented figure.
James Bullard told to CNBC, the unemployment rate is going to be extremely high, The first time ever in the history of the US, it could be more than 20 percent.
CNBC reported that America lost more jobs than they gained in a decade, according to the bureau of labor statistics the US economy sheds 701,000 jobs, it is the first time the economy is losing jobs since from 2010.
Jobs cut down took place at restaurants and bars, by 417,400 jobs, retailers by 46,200, and health care employment by 43,000.
Not only the labor jobs are affected, but the white-collar job is also at risk, as the market shut down, many businesses are affected and the big companies are also laying off their employees in order to minimize their operational cost to survive in these crises said Daniel Zhao, a senior economist at careers website Glassdoor.
Stifel chief economist Lindsey Piegza is also forecasting peak unemployment of about 30%, saying in a report Friday that "as we continue to keep the economy closed, more than 45 million Americans are expected to lose their jobs.
It will be a miracle if the economy recovers within a year, but the chances are that I may take years to get back to its original point, as the economy is facing huge recession and it is expected to increase further, as Feb Bullard said the highest it can go to 30%.
Fed Bullard said the massive drop in U.S. private payrolls for April, reported on Wednesday, is 'not a surprise' but employment could recover dramatically in the second half of the year if the coronavirus pandemic is controlled.
Investors eyes are stuck on the labor department’s key job report that will come on Friday, but in other way investors are also expecting the unemployment rate will sharply increase as a result of lockdown due to coronavirus, it is not surprising, but the fact is that due to lock down the business graphs are declining and operating cost is increasing so to maintain an equilibrium the investors, factory, restaurant, and retail owners have to cut their cost, and the easiest way to cut the cost for them is to layoff the employees, hence cutting the labor cost can lower their expenses and saving them from huge losses.