Unemployment Silver Lining

The much-anticipated April employment report showed the unemployment rate rising to 14.7% as 20 million jobs were lost. The double-digit increase in the unemployment rate was the single largest monthly increase in history.

Chart Unemployment Silver Lining 5 13 20

While there is nothing good about losing 20 million jobs there is one silver lining in the report. Nearly 18 million of the layoffs are classified as temporary instead of permanent. As such, the ratio of permanent to temporary layoffs (black line) declined to an all-time low, meaning most of these lost jobs have the potential to come back over the coming months. While it by no means guarantees a V-shaped recovery, it is an encouraging sign. Looking back over the prior two recessions, a higher percentage of job losses were permanent than today; therefore, they inflicted more damage to the economy. We will be watching how this trend develops over the coming months as some of these layoffs may become permanent.