U.S. Private Sector Job Quality Index estimates that some 37 million domestic jobs are vulnerable to layoffs.
Hardest hit would be limited- and full-service restaurants, with some 9 million jobs at risk of layoffs in the near term. Fields such as education have some 3.2 million jobs at risk, while general stores have 2.8 million, according to the report.
The report comes as economists are bracing for a wave of job losses that could drive claims for jobless benefits to the highest level in recent memory.
Bank of American on Friday said it estimates 3 million jobless claims to be filed for the week ending March 21.
Over the next two to three weeks, Emergent Research estimates 2 to 3 million claims for unemployment insurance.
The scale of job losses is likely to hit unprecedented levels in the coming weeks and months as business activity in cities, municipalities and states is brought to a sudden halt in an attempt to lessen the spread of the coronavirus, officially called COVID-19, pandemic.
Industries from energy and airlines to cruise operators are being hammered by the crisis.
Economists at Goldman Sachs warn U.S. GDP will collapse at a 24% rate, a far cry from the “4, 5, and even 6%” growth scenario presented by President Trump just over two years ago.
Allianz’s Mohamed El-Erian said: “We’re in a global recession because of what economic sudden stops do.”
“There is a subset of these workers, in jobs often offering substantially less income than the above average, who are particularly vulnerable to cessation of economic activity due to the spreading pandemic,” wrote officials at the private-sector job quality index created by researchers at Cornell Law School, including Daniel Alpert, Jeffrey Ferry, Robert Hockett and Amir Khaleghi.
David Choi, an economist from Goldman Sachs, says initial claims for the week ending March 21 may jump to a seasonally adjusted 2.25 million, basing his analysis on recent anecdotes and news reports.
States around the U.S. are already reporting a massive surge in the number of people applying for jobless benefits.
It is estimated that claims for people receiving unemployment benefits could blow past a record peak of 6.6 million in 2009, if early figures hold.
Over a million small business workers could lose jobs
A majority of U.S. unemployment benefit claims could come from employees of small businesses, according to one estimate. This will further hurt the sector as it is losing ground to major corporations over the past several decades.
“Our number is bad. It’s in the millions,” Steve King, Director for Emergent Research, about his firm’s projections for unemployment insurance claims expected over the coming weeks and months.
In past recessions, small firms have laid off people faster than bigger firms, resulting in a relatively high share of early applicants for unemployment benefits, according to King, whose firm focuses on the small business economy.
“Based on what we are seeing and hearing, this is happening again,” King said, cautioning that until the data starts coming out over the next couple of weeks the projection is uncertain. “Our guess would be somewhere around 60%-70% of the unemployment insurance claims over the next few weeks will come from employees of small businesses.”
Over the next two to three months, if the shutdown of many businesses persists, Emergent estimates 24 million workers will file, representing nearly half of the 58 million Americans who work for private companies with fewer than 500 employees. The numbers do not include the full- and part-time gig workers who are ineligible for unemployment compensation.
Small business in decline
Members of the National Business for Independent Business (NFIB) are expressing great concern over keeping their doors open, according to Holly Wade, director of research and policy analysis for the small business advocacy organization.
A slide in the number of existing small firms would exacerbate their already waning stake in the U.S. economy, she added.
“The churn of small business formation has been in decline for decades now,” Wade said. “And that’s been the focus of a lot of academic research to figure out why this trend is happening.”
“So when we go through something like this, an economic crisis, like we did with the financial crisis, on the other side, we want to make sure that the landscape to start a business and define market opportunities is easily accessible and that there are very low barriers to entry to get the small business sector moving again,” Wade said.
The majority of firms will need to make quick decisions about whether to remain in business because most keep 30 days of full reserves, King said, noting that labor-intensive companies such as restaurants tend to keep less in reserves.
Why small businesses need a lifeline
On Thursday, lawmakers introduced a new relief package proposal with additional lifelines for small businesses, including $300 million in stimulus funds, part of which offers grants and loans to certain small businesses that keep their employees on their payrolls during the crisis, and penalty-free delays for tax filings and payments. The Small Business Administration also began approving disaster loans to eligible applicants.
In an email Deutsche Bank Securities Chief Economist, Torsten Slok, emphasized the critical need to keep small business afloat. “The U.S. economy mainly consists of small businesses…and this is a challenge in a situation where policymakers want to quickly get money into the hands of the corporate sector either via fiscal policy or monetary policy.”
On Thursday, jobless claims for the week ending March 14 jumped to 281,000 from 211,000 the prior week. The 33% increase outpaced the largest increase during the Great Recession of 14%. But those numbers fail to represent the reality of what’s coming, King said.
“Based on everything we’re hearing, this week started the layoff week,” he said. “I don’t think it will be reflected in the numbers for another two weeks.”
“With an average of 30 days reserves, if your revenue is cut by 50 or 60% you’re gonna have to move quickly and you’re gonna have to lay people off,” King said. “The good news is there’s a bunch of businesses that aren’t shut down.”
The mergers will come
The eventual recovery could lead to even more consolidation of businesses, Mark Cooper, CEO of P.J. Solomon, told.
Mark Cooper noted that mergers typically happen after a downturn.
“The mergers will come, in my view, in a few flavors. One will be … in difficult industries like retail and site-based oriented businesses, movie theaters, amusement parks, and the like. Those might have companies coming together to show greater strength and have synergies in order to withstand the difficult marketplace,” he said.
Already, bigger businesses seem to be benefitting from the coronavirus shutdowns even as small businesses suffer. This week, mega corporations Walmart and Amazon announced they planned to hire due to a surge in business. Walmart said it would bring on 150,000 workers, while Amazon plans to hire 100,000 full- and part-time warehouse workers.
Shoppers wait in 2-hour line for firearms in New York
As the coronavirus fear grips the U.S., a diverse crowd spanning varying ages and ethnicities waited out a 2-hour line to purchase firearms and ammunition outside a Sloatsburg, New York, outdoor gear and weapons shop on Saturday.
Of 14 patient shoppers who chose to keep their identity private, 12 said they made Davis Sport Shop a destination Saturday to ensure protection during the U.S.’s coronavirus response.
The weapons, they said, might be needed if virus scares cause social upheaval that may threaten their lives or their property.
“This is something I’ve wanted to do for a long time,” a woman accompanied by her mother, and from a nearby suburban community about 30 miles outside New York City, told Yahoo Finance. “I got my firearm license a couple of years ago. I’m a mother of 3, home with my kids, by myself. I’m not panicking, but I worry because other people are panicking.”
‘I could rob you right now’
Asked from where the panic originated in her community, the mother of 3 said, Facebook, explaining that her local neighborhood was not giving off a sentiment of heightened concern.
Another man said he was worried his local police force would be too preoccupied with handling virus-related mandates and emergencies to respond to petty crimes such as robbery and looting.
“I could rob you right now,” he said. “And they might not arrest me.”
Another, on his way out of the shop, carried a new purchase of a long rifle covered in a zippered case. Asked whether his purchase was in response to coronavirus, he said, “It definitely is.”
Shoppers were a mix between first-time buyers, and experienced gun owners wanting to add to their existing collections. They were also split on the types of weapons they were seeking — some sought pistols, others intended to buy rifles.
Three 20-something women who drove to the Davis shop together said they each planned to purchase a handgun for the first time.
“We drove all the way here from Long Island,” a woman in the group said.
Two male shoppers in their 50s said they were willing to stand in line because their efforts to purchase online had failed.
“They were wiped out,” one said. “I came here because I couldn’t find anything online.”
It’s no surprise in the U.S. that the coronavirus fear is fueling the stockpiling of weapons and thus a tempered ripple through publicly traded weapons and ammunition companies.
Stock in Smith & Wesson subsidiary American Outdoor Brands took a hit as public markets began to avalanche in early March, though rebounded the past week to end Friday’s tradition session at $7.70 per share, healthily above its 52-week low of $5.41.
Vista Outdoor Inc. parent company to multiple ammunition companies, bounced in similar fashion this week, closing Friday at $7.00 per share, between its 52-week range of $4.29 and $10.42.
Strum, Ruger & Co., which manufactures and sells pistols, rifles and revolvers, finished Friday’s trading session at $45.00 per share, comfortably near the midpoint of its 52-week range of $38.44 and $57.86.
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