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The Economy Under COVID-19: Notes From the Trenches - May 19, 2020

Alex Carrick
The Economy Under COVID-19: Notes From the Trenches - May 19, 2020

There are currently two crises underway simultaneously. The advance of the novel coronavirus is taking a terrible toll in terms of physical and emotional well-being. At the same time, job losses resulting from ‘social distancing’ are sending the economy into a tailspin. To fight on both fronts, governments are advancing rescue packages of never-seen-before dimensions. Every day, the tremendous number of factors in play reconfigure in a new way. These ‘from the trenches’ notes attempt to shed some light along a murky pathway.

  • The U.S. seasonally adjusted (SA) unemployment rate in April was 14.7% and the not seasonally adjusted (NSA) figure was 14.4%. Both those numbers understate the true out-of-work situation in the country.
  • Crucially, the labor force participation rate in the U.S. dropped from 62.6% in March to 60.0% in April (both NSA). When asked by the Bureau of Labor Statistics (BLS) in its ‘household’ survey if they were actively seeking work, 6.9 million individuals responded in the negative. They didn’t see any point. They didn’t believe they had any prospect, under coronavirus pandemic circumstances, of gaining a position at this time. Many of those respondents were young adults newly laid off in the hotel, restaurant and bar business. ‘Not seeking employment’ meant they were excluded from the labor pool. If the participation rate in April had stayed the same as in March, America’s NSA unemployment rate would have been 18.1%.
  • The labor force participation rate (NSA) in Canada in April retreated even more than in the U.S., moving to 59.5% from 62.8% in March. Where 6.9 million Americans stopped looking for work, the number of Canadians who decided such a search would be fruitless was 1.0 million. If Canada’s participation rate had stayed the same in April as in March, the NSA unemployment rate would have been 18.0% rather than 13.5%.
  • Lean your head back and have a cloth dipped in cold water handy. Here are some nosebleed numbers from April’s labor market reports for the U.S. and Canada.
    • The number of jobs in the U.S. accommodation sector was -41.6% y/y.
    • The number of jobs with U.S. food services and drinking places was -46.9%.
    • The number of jobs in U.S. gambling establishments was -58.7%.
    • The number of part-time jobs in Canada was -30.2%.
    • The number of public sector jobs in Canada was -3.2%. Okay, that last figure is out of step with the others. Private sector jobs in Canada in April were -17.3%. Clearly, there’s an advantage to working for the government.
  • As Rodney Dangerfield would have asked, “How do you know when you can’t get no respect?” When you send yourself an e-message, as a reminder of something important, and you can’t find it later in your inbox, because Outlook has relegated it to junk mail.

Read the previous article here: The Economy Under COVID-19: Notes from the Trenches – May 15, 2020.

Alex Carrick is Chief Economist for ConstructConnect. He has delivered presentations throughout North America on the U.S., Canadian and world construction outlooks. Mr. Carrick has been with the company since 1985. Links to his numerous articles are featured on Twitter @ConstructConnx, which has 50,000 followers.

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