The economic impact from the coronavirus pandemic will be the largest ever felt in the United States, the Labor Department predicted on Friday.
701,000 jobs were lost in March and the unemployment rate climbed to 4.4 percent, according to the Labor Department report, as non-essential businesses have temporarily shut down in order to slow the spread of COVID-19.
The jobs report follows years of consistent growth since September 2010 and is said to only touch on the scale of the economic collapse to come.
“The decline in nonfarm payrolls, of 701,000 jobs, while a sharp reversal from strong January and February employment figures, is going to get much worse in the months to come, as the Bureau of Labor Statistics' surveys catch up with the reality of significant economic shutdowns across most states”, wrote Rick Rieder, chief investment officer of global fixed income at BlackRock.
Following Friday’s report, Ellen Zentner, chief economist at the Morgan Stanley, dropped her growth predictions for the second-quarter gross domestic product to -38 percent, forecasting that the US is ready to lose up to 21 million jobs - surging the unemployment rate to 15.7 percent, a scale of job losses not experienced in the US since the Great Depression.
“We expect the U.S. economic recovery will be more drawn out than previously anticipated, marked by a deep drop into recession and slower climb out”, Zentner said.
Full-year GDP will drop by 5.5 percent, Zentner predicts, which would be the largest annual decline in growth since 1946, when wartime production collapsed after the surrender of the Axis powers at the end of World War II.
According to Savita Subramanian, equity and quant strategist at Bank of America, it could take "multiple years" to recover lost corporate earnings.
“During the financial crisis, it took four years to get back to peak earnings; during the Great Depression, it took over a decade”, Subramanian wrote.
The coronavirus pandemic has afflicted 1.1 million people across the world and seen over 60,000 deaths, Johns Hopkins University & Medicine reports.