The U.S. Department of Labor reports that 20.5 million jobs were lost in the month of April. The unemployment rate soared to 14.7 percent, and that could be just the beginning. WGBH Morning Edition host Joe Mathieu spoke with the Assistant Chair of Boston College's Economics Department, Bob Murphy, about this latest jobs report and what it could mean down the road. The transcript below has been edited for clarity.
Joe Mathieu: How'd this jive with your expectations?
Bob Murphy: Well, I think this was clearly in the cards. Everybody was expecting a pretty bad report and that's what we've seen — unemployment moving up so sharply [and] job loss just accelerating as the economy fell off the cliff over the last month and a half with the close downs. So, again, not unexpected. We knew it would be bad, and I would say it's right about where people were expecting, whether above or a little bit below. It's really a terrible report.
Mathieu: The way we interpret these things has changed a lot, Bob. To think that a million jobs is a rounding error in these reports now. We used to split hairs on thousands of jobs, whether it was 100,000 or 90,000. At this point, 20 [or] 25 million? It's what Wall Street expected.
Murphy: Exactly. I mean, we never thought we'd be in this situation. You couldn't have sold a movie script to someone with these kind of numbers in it. But I think one important point to look at in the report that maybe gives us a little hope in terms of where things head down the road is the number of unemployed who are reporting that they are on temporary layoff. That surged 18 million in April. Permanent job losers increased by — again, in normal times we'd be concerned by a mere half million — 544,000. So the good news there is that the expectation, at least for these households who are reporting their job loss, is that they are coming back down the road.
Now, as we move into the openings of economies and people start to feel more comfortable coming out, the question is, is there still some hesitancy in terms of concern about the virus still being out there? And also, I think as people try to return to work, if they've got constraints like lack of childcare, schools remaining closed [and] summer camps remain closed, I think that's going to slow the ability of the economy come back even if restrictions are taken off and economies are open for business. That could mean that some of these jobs that right now are temporary losses could turn into permanent losses. So I think that's a concern going forward.
Mathieu: Well, that's for sure. With that said, if things don't go the way a lot of people expect in the reopening and if we do, in fact, enter a protracted recession, are all bets off in terms of those people furloughed expecting to return to work?
Murphy: I think that would be certainly a concern. The longer this goes on, the more likely it is that businesses will be downsizing [and] closing, and the jobs that right now may be still out there and people are on temporary furlough may disappear. So I think that's a concern. The sooner we have resolution to the medical issue, the sooner we have a vaccine and we can turn this around, I think the sooner we'll know the answer to that. But again, that's a certain concern that I would have as we head into the next six months.
Mathieu: Unemployment rate 14.7 percent. The markets were looking for 15, so again, that's pretty much in line. It's a staggering figure to think of 15 percent unemployment, Bob. Many people think that still does not reflect the real number. As we work into May and the beginning of the summer, are we going to see much higher levels of unemployment?
Murphy: Yeah, my expectation would be that that unemployment rate will move up somewhat more in the next month or two. Again, important to remember that the data that are being reported today are mid-April, so it would have been the middle week of April when the surveys were done. And we know that there's been additional claims for unemployment insurance that have come the last several weeks, so certainly the unemployment number will move upward.
The other thing I think that's important to keep in mind here is the payroll job loss. That doesn't necessarily pick up lots of self-employed or contract workers, so again, the payroll number probably understates the true job loss that's out there as well. So certainly these numbers are bad. My guess is that we will see the unemployment rate moving up the next several months. The payroll numbers in terms of total job loss will come down, but we will continue to see job loss reported by businesses and so the total number of folks that are unemployed will certainly be increasing.
Mathieu: Just when we back off this jobs picture — looking at jobs lost, looking at the unemployment rate and considering the challenges that we're gonna have potentially reopening — there's something called economic inertia here. I wonder how concerned you are about this slowing into the summer [and] into the fall to a point where we're in a recession that could last more than a couple of quarters.
Murphy: I think that as people now have pulled back spending as we move into the rest of this year, even if businesses are opening up [and] restrictions are coming off, consumer spending, if it continues to be weak, will continue to be a damper on gains in the job market, et cetra. So I think there could be a relatively gradual return to economic growth so that we could see the recession linger through the next six months to even a year. Again, a lot of this is going to depend on what happens on the medical front, and to the extent that confidence can be returned to households and individuals in terms of being able to get out and go back to normal activities.
So certainly I think in the cards now is not what some people were claiming initially, which would have been a V-shaped recovery where we go down and then we come back quickly. I like the Nike swoosh description, although we're going to come out a little bit more gradually as we come back. And the extent to which that lingers and leads to a recession that's relatively prolonged is, I think, dependent fully on how the medical side evolves.
