The United States could lose up to 1 million jobs in March because of the severe disruptions caused by the coronavirus pandemic, former Trump administration economist Kevin Hassett warned Monday.
“You’re looking at one of the biggest negative job numbers we’ve ever seen,” Hassett told CNN’s Poppy Harlow.
That ominous forecast underscores the enormous strains the coronavirus has placed on the American economy. Airlines are canceling flights. Cruises are halted. Nike (NKE), Apple (AAPL) and other retailers are shuttering stores. Las Vegas casinos are going dark. Millions of Americans are working from home. And some US states are forcing restaurants and bars to close to fight the spread of the pandemic.
“The odds of a global recession are close to 100% right now,” said Hassett, who is now a CNN economics commentator.
At a minimum, businesses disrupted by the health crisis, especially in the tourism industry, will freeze their hiring. That hiring freeze could severely weigh on the March jobs report.
“Nobody is going to get hired next week,” Hassett said, adding that the job losses will hopefully “reverse” quickly once the health crisis stabilizes.
Great Recession job losses peaked at 800,000
Still, a million jobs lost in a single month would be a stunning figure, exceeding even the depths of the Great Recession.
The biggest job loss during that downturn was in March of 2009, when payroll employment plunged by 800,000. That followed a loss of 743,000 in February and 784,000 in January of that year.
The biggest one-month job loss in history was in September of 1945 when 1.96 million jobs were lost as the US economy shifted from a war footing to a post-war footing.
That did not include members of the military moving out of the service since these numbers are for civilian employment.
Russell Price, chief economist at Ameriprise, doesn’t think March job losses will be nearly as high as 1 million.
“Yes, hiring is likely to come to a halt. But to get to that type of number we would have to see mass layoffs,” Price said.
America’s jobs market was very sturdy heading into this crisis, with payrolls soaring by nearly 300,000 in February. That strength could limit the damage in the coming months. If anything, US businesses were facing a shortage of talented workers.
“Companies will be cautious about cutting workers if they think this will be a short-term phenomenon,” Price said. “They are going to try to hang onto workers for fear of not being able to get them on the other side.”
GDP could plunge by 5%
Seeking to help the economy cushion the blow from the coronavirus, the Federal Reserve slashed interest rates to zero Sunday evening as part of a series of emergency actions. US stocks resumed their recent plunge on Monday, despite the dramatic intervention by the Fed.
“The market understands that the Fed, with its hundreds of economists, are thinking about the numbers coming in and they’re sure they’ll be terrible, which is why they did this action,” Hassett said.
Economists broadly agree that the coronavirus shock will cause the US economy to go in reverse during the second quarter. The question is how negative and for how long.
Gary Cohn, another former Trump administration economic official, told CNN last week the United States is already in recession.
Hassett predicted a “very terrible” second quarter, with GDP shrinking by 5%. Whether the economy shrinks again in the third quarter, he said, will depend on how quickly health authorities get ahead of the coronavirus.
“That’s a big unknown right now,” Hassett said.