MANHATTAN (CN) — Markets closed out the week on a positive note even after a terrible jobs report that likely does not include all the unemployment caused by Covid-19.
The Dow Jones Industrial Average finished the day Friday at 24,331 points, a nearly 2% increase for the day, while the S&P 500 and Nasdaq also had gains of about 1.6% each.
Earlier this week investors already sifted through a historically bad ADP unemployment report, as well as the Labor Department reporting an additional 3.1 million new unemployment claims filed the week ending May 2.
As expected, the jobs report Friday from the Bureau of Labor Statistics showed a plunge in employment, with 20.5 million non-farm jobs lost in April. The unemployment rate as of last month was 14.7%.
In February, before the coronavirus took hold in the United States, the unemployment rate was at 3.5%. Unemployment during the peak of the Great Recession was just under 10%. During the Great Depression, unemployment rose as high at 24.9% in 1933 before it slowly crept back down after the New Deal was passed.
Most Wall Street analysts expect further layoffs, and some caution the economy could take longer to snap back. In an investor note Friday, research analysts at Goldman Sachs predicted further bankruptcies and shuttered businesses, as well as the possibility of a dreaded U-shaped economic recovery.
“Under current conditions it is uncertain how many closed businesses will actually reopen and be able to rehire their workers, and the mix of permanent vs. temporary job losses is likely to become less favorable over time if the economy does not recover,” the note states.
Unemployment numbers in the Friday report represent only those employees who are actively looking for a job. Taking into account those employees who were forced into part-time jobs and others marginally attached to the labor force, the unemployment rate goes from 14.7% to 22.8%.
The Friday report classified about 18 million employees as “temporary layoffs,” indicating those jobs could come back quickly once the economy rebounds.
But the survey also classified employees who were uncertain about whether they were laid off temporarily into that “temporary layoff” category.
“I would expect that by the end of this year the official employment statistics will undergo some large revisions,” Mike Pagano, a finance professor at Villanova University, wrote in an email. “We will have to wait a few months to see a more accurate picture, but for now we can certainly see that has been a swift and punishing drop to employment.”
The jobs report also may not paint a full picture of when workers will get their jobs back, according to an investment note from Goldman Sachs. “Under current conditions, it is harder than usual to know how many currently closed businesses will actually reopen and be able to rehire their workers,” the bank’s researchers wrote.
President Trump brushed off concerns about the jobs report Friday, saying in an interview on Fox that the numbers were “totally expected” and that “those jobs will be back.”
Still consumer sentiment remains low.
Most of the jobs lost — 7.6 million in April alone — were in the leisure-hospitality segment. Even if lockdowns are universally lifted, these jobs may not come back so easily with Americans unlikely to book hotels and cruises at the same rate they did prior to the pandemic.
National economic adviser Larry Kudlow noted on Friday that the White House is not inclined to shut down the economy if a second wave of Covid-19 hits this fall.
More than 3.9 million people worldwide have been confirmed infected by Covid-19, according to data from researchers at Johns Hopkins University, and 272,000 have died. In the United States, more than 1.2 million people have contracted the novel coronavirus and 76,000 have died.
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