Moody’s Economist Expects Job Growth in June
This week we were hit with dismal back-to-back reports on the economy, but one economist says the worst is finally behind us.
Yesterday ADP’s job report found that 2.76 million jobs were lost in May, after an astounding 19.6 million were lost in April. The only silver lining is that 8.75 million jobs were expected to be lost in May.
Today we learned that 1.877 million jobs were lost last week, worse than the 1.775 million losses expected.
But will things finally turn around now? Moody’s economist Mark Zandi sees reason to believe as much.
According to CNBC:
“The good news is I think the recession is over, the Covid-19 recession is over, barring another second wave, a major second wave, or real serious policy errors,” said Mark Zandi, chief economist at Moody’s Analytics, which puts the private payrolls report together with ADP. The bad news, he added, is that “the recovery will be a slog until there’s a vaccine or therapy that’s distributed and adopted widely.”
While the ADP count can be volatile and vary widely from Street estimates, this one took that to another level. However, Zandi said there are several explanations.
One is that last week’s jobless claims report provided the first indications that the pace of layoffs had slowed notably and that people were going back to work.
Continuing claims, or those workers receiving unemployment benefits for at least two weeks, tumbled by nearly 3.9 million even as first-time claims numbered more than 2.1 million. Continuing claims peaked at 24.9 million on May 9, but that was three days before the sample week that both ADP and the Labor Department use for their estimates.
Zandi said he still expects the unemployment rate to top out above 20%, the worst since the Great Depression. He estimated that some 50 million American workers have been impacted in some way by the coronavirus-induced recession.
“The job loss is abating. Layoffs appear to have peaked in late March and early April and they were winding down by early May,” Zandi said. “I would expect job growth to resume in June.”
While the economy will finally stop hemorrhaging jobs and resume job growth in June according to Zandi’s predictions, he does expect unemployment to level off around 10% until a vaccine is made widely available, which was the peak during the last financial crisis. Pfizer projects an October release date for the coronavirus vaccine they’re developing, but it must be noted that such an early release would be a historic feat. Previously, the fastest vaccine ever brought to market (the mumps vaccine) still took over four years.