by Robert Hughes
The American Institute for Economic Research
U.S. nonfarm payrolls were slashed by 20.5 million in April, with losses spread across nearly every industry (see first chart). Initial claims for unemployment insurance totaled 33 million over the last seven weeks (some of which are not completely captured in the April employment report) suggesting additional losses in coming months. There were a number of technical issues with the April report including an unusually low response rate from the household survey portion and improper coding of some classifications. While accuracy may be somewhat subpar, the interpretation is the same: the U.S. labor market has been crushed by the pandemic and subsequent policy responses.
Payroll employment is a key coincident indicator for the economy. As such, the second of what is likely to be a number of months of sharp declines in payroll employment suggests that the U.S. economy may have peaked in February and entered a recession in March.