Washington (AFP) - With the US economy at a standstill forced by the coronavirus pandemic, the widespread damage is becoming more evident, but employment data for March is underestimating the losses.
Bustling cities have been turned into ghost towns, as COVID-19 restrictions have forced shops, restaurants and offices to close, leaving grocery stores and hospitals as the epicenter of activity.
Some economists are predicting the worst jobs losses since World War II.
Payrolls firm ADP said Wednesday that US private hiring fell in March, with small businesses bleeding jobs at a rate not seen since the worst of the global financial crisis in early 2009.
But it will be much worse in April, with economists warning job losses will surge to a previously unimaginable range of 10 to 20 million -- a shocking figure in what was billed as a solid economy.
Like the government jobs report due out Friday, the ADP National Employment Report looks at payroll data in the week including the 12th day of the month -- which was before the most stringent of the lockdowns due to COVID-19 took effect last month and forced businesses nationwide to close their doors.
"As such, the March (data) does not reflect the full impact of COVID-19 on the overall employment situation," ADP cautioned in its report.
In fact, following last week's data from the Labor Department showing 3.3 million workers filed for unemployment benefits in the week ended March 21, Ian Shepherdson of Pantheon Macroeconomics dismissed the ADP data as "irrelevant."
"These numbers don't matter; they capture only the leading edge of the virus hit. The pain is coming in April, when payrolls are likely to drop by perhaps 10 million-plus," he said in an analysis.
"The labor market was in good shape before the virus, but we knew that anyway, and it's irrelevant in the face of the impending discontinuity in the data."
Small businesses suffering
Economists caution that the government's closely-watched March employment report also will dramatically underestimate the damage to the economy from coronavirus.
Gregory Daco of Oxford Economics has a more dire prediction of 20 million jobs lost in April.
"The sudden economic stop triggered by the coronavirus crisis has given rise to an unprecedented wave of layoffs," he said in his analysis.
"Given the extreme nature of the shock, we anticipate the US will experience the sharpest job losses and highest rise in unemployment since World War II."
The government has thrown a lifeline to small and medium businesses to try to stem the damage. Starting Friday, they will have recourse to an unprecedented support program, offering $349 billion in the form of loans that will not have to be repaid if they are used mostly to pay workers.
The paycheck protection program allows companies with less than 500 employees to receive loans of up to $10 million if they rehire and retain their workers and use three-fourths of the money on payrolls.
The government has cut out the red tape usually associated with such loans, and will forgive the full amount if companies pay workers and use no more than 25 percent towards rent, mortgage and utility bills.
That program is part of the $2.2 trillion rescue package President Donald Trump signed into law last week that also has bailouts for the airlines and a massive expansion of unemployment benefits.
The Labor Department on Thursday will provide the next look at the US job losses with data on first-time unemployment claims for the week ended March 28 after most businesses were obliged to shut down.
The ADP report showed total private employment fell by 27,000 in March, the biggest drop since September 2017, as small businesses suffered the largest setback.
Their employment plunged by 90,000, with the smallest firms employing less than 20 employees taking the biggest hit, the report said.
The ADP data showed both goods and services firms lost jobs, with the biggest decline of 37,000 suffered by firms in the trade, transportation and utilities category.
