U.S. Job Losses Due to Coronavirus Likely to Set Country 'Back Two Decades,' Economic Analysis Shows

The record-breaking number of job losses in April will likely set U.S. employment levels back to an amount not seen since the late 1990s, a new economic analysis projects.

Elise Gould, senior economist at the Economic Policy Institute, published an analysis of the latest economic data in a Thursday blog post, a day before the Department of Labor's release of the much anticipated April jobs report.

On Thursday, the government released its latest weekly update on jobless claims, showing that an additional 3.17 million people applied for unemployment benefits in the week ending May 2. This brought the total since the start of the coronavirus pandemic to more than 33 million.

"Since March, the coronavirus pandemic has sent tsunamis throughout the economy, causing devastating losses never before seen in such a short period of time," Gould wrote in her analysis.

The economist noted that initial jobless claims were concentrated in the hospitality sector, as restaurants, hotels and the tourist industry suffered significantly. But Gould noted that it now appears job losses have "spread throughout most of the labor market over the last several weeks."

New York State Department of Labor
A man stands in front of the closed offices of the New York State Department of Labor in Brooklyn on May 7. Stephanie Keith/Getty

"It is likely that the job losses we experienced have set us back about two decades of employment growth. At the low end, the jobs losses in April will most certainly have canceled out all of the gains in the recovery from the Great Recession," the economist wrote. "At the high end, we will have returned to a level of employment last experienced in the mid-1990s, canceling out all of the gains in employment over the last 25 years."

Other economists have estimated it's likely the U.S. has already reached joblessness level close to 20 percent and is closing in on levels last seen in the early 1930s during the Great Depression, when unemployment peaked at 24.9 percent.

"My guess right now is that it's going to be north of 16 percent, maybe as high as 19 or 20 percent," Kevin Hassett, an economic adviser to President Donald Trump, said in a CNN interview on Tuesday.

"And so we are looking at probably the worst unemployment rate since the Great Depression," Hassett warned.

Paul Krugman, a Nobel Prize–winning economist, tweeted a similar analysis on Thursday morning, suggesting that the Labor Department report to be released Friday might not show the full picture of unemployment.

"Tomorrow's report may not reflect where we are right now, which is probably around 20% unemployment," Krugman tweeted. "Historical perspective: this is close to estimates of peak unemployment during the Great Depression, and worse than unemployment for most of the 1930s."

Andrew Stettner, a senior fellow at the Century Foundation, a progressive think tank, said the data released so far suggested that Friday's job's report would be "catastrophic."

"With claims at these levels, it would be no surprise if payrolls shrunk by an all-time high of 20 million jobs in the month of April," Stettner told Newsweek. "The data point to an unprecedented cascading crisis that hit front-line services like restaurants and retail businesses first but has now reached into every corner of our economy, from manufacturing to even the health care industry."