While companies cut nearly 2.8 million jobs last month, Mark Zandi, chief economist at Moody’s Analytics, said it was far less than forecast and the worst of the economic impact of the coronavirus pandemic is behind us.
“The good news is I think the recession is over, the COVID-19 recession is over, barring another second wave, a major second wave, or real serious policy errors,” Zandi told CNBC.
The bad news, he added, is that “the recovery will be a slog until there’s a vaccine or therapy that’s distributed and adopted widely.”
Zandi’s comments came minutes after a report from ADP, the New Jersey human resources management services company, said U.S. employers cut 2.76 million private payrolls in May, as the coronavirus took its toll on domestic economic activity and the labor market for another month.
Economists had predicted the job loss numbers would be 8.75 million as an economy battered by the coronavirus pandemic takes its first steps to reopening.
“The impact of the COVID-19 crisis continues to weigh on businesses of all sizes,” Ahu Yildirmaz, co-head of the ADP Research Institute, said in a statement. “While the labor market is still reeling from the effects of the pandemic, job loss likely peaked in April, as many states have begun a phased reopening of businesses.”
Zandi told CNBC he still expects the unemployment rate to peak at 20 percent or higher, the worst since the Great Depression, and he acknowledged that 50 million American workers have been hurt by the coronavirus-induced recession.
Still, Zandi predicted unemployment will likely level off at 10 percent, which was the financial crisis peak, and stay at that level unless Congress approves a second stimulus package.
Last week, PYMNTS reported more than 2 million Americans filed for unemployment benefits as the number of workers seeking assistance since the COVID-19 pandemic began in mid-March topped 40 million. But the seasonally adjusted initial claims for the week ending May 23 was 2.1 million, down from 323,000 from the previous week’s 2.4 million.
“The job loss is abating. Layoffs appear to have peaked in late March and early April and they were winding down by early May,” Zandi told the network. “I would expect job growth to resume in June.”