INDICATOR: April Private Sector Job Losses

KEY DATA: ADP: -20.24 million; Leisure and Hospitality: -8.6 million; Trade and transportation: -3.4 million; Construction: -2.5 million

IN A NUTSHELL: “Friday’s employment report will be a record breaker.”

WHAT IT MEANS: The April employment report is going to be one for the history books, which is something the unemployment claims numbers have warned us about for a while now. The extent of the payroll decline should exceed any other year, let alone month, in history. The employment services firm ADP estimated that private sector job losses exceeded 20 million in the month. That was pretty close to expectations. The greatest losses, not surprisingly, were in the hospitality, construction, trade and transportation sectors. However, every industrial sector of the economy and every size grouping was battered by the shutdowns.

MARKETS AND FED POLICY IMPLICATIONS: The COVID-19 virus has devastated the economy and we are starting to get the numbers on the extent of the damage. On Friday, the government releases its estimate of job losses and the consensus is for something in the 22 million range, which is where I am. To put that in perspective, during the Great Recession, “only” 8.7 million jobs were lost over a 14-month period. That massive payroll decline should lead to an unemployment rate that is estimated to be between 15% and 20%. It is hard to get a handle on the number as the change from the March 4.4% rate is so large. I am looking for a number around 18.5%.

But the April number might not be the peak. Even with the economy slowly starting to reopen, the number of unemployed should continue to rise sharply as governments, as well as businesses that have tried but not succeeded at holding the line, are now laying off workers. The pace of new claims for unemployment is slowing, but remains at levels unimaginable just a few months ago. And, of course, state governments are still trying to process the massive backlogs. I still expect the unemployment rate to exceed 20%. If it doesn’t do that in April, look for it in May. So, when it comes to the labor market, the way to describe it is to use one of my favorite George HW Bush phrases: “We are in deep doo-doo” and it is only going to get deeper.

Joel L. Naroff is the president and founder of Naroff Economic Advisors, a strategic economic consulting firm.