RALEIGH – The economic impact of the coronavirus could be tremendous with millions of jobs lost, according to a new report. And North Carolina won’t escape the cuts. Aa NC State economist predicts “five digit” losses in North Carolina where nearly 5 million people hold jobs.
“The job market will be adversely impacted. I would expect five digit job losses in North Carolina,” NCSU’s Dr. Mike Walden tells WRAL TechWire.
Nationally, the impact could be worse.
Nearly 80 million jobs in the US economy are at high or moderate risk, according to Moody’s Analytics. That’s more than half of the 153 million jobs in the economy overall.
That doesn’t mean that all those jobs will be lost. But it’s probable that as many as 10 million of those workers could see some impact to their paychecks – either layoffs, furloughs, fewer hours or wage cuts, said Mark Zandi, chief economist at Moody’s Analytics.
Walden does see some bright spots.
“The only growth areas [for jobs] will be in personal delivery to homes and health care,” he says.
Another strong point is the state of the NC economy.
“The only good aspect is these losses will be starting from a very strong job base,” Walden notes.
“Of course, how long this lasts depends on the virus, but the worst case scenario suggests major improvement won’t be until the fall.”
Some layoffs begin in NC
A trickle of job cuts has already begun.
While not all directly attributable to the virus, North Carolina companies have disclosed plans to make 2,692 job cuts across 15 counties since Jan. 1, according to layoff reports filed with the North Carolina Department of Commerce.
The virus is hitting North Carolina at a time when unemployment is well under 4 percent. According to US Bueau of Labor Statistics as of March 16, the state’s unemployment rate stood at 3.6 percent in January with more than 4.9 million people working.
And as of March 17 the jobs site Indeed.com lists more than 100,000 openings across North Carolina.
Some certainly predated the virus, such as the pending loss of more than 100 jobs when the JCPenney store at North Hills Mall in Raleigh closes in April.
But several other closures in Wake have added up to more than 400 job losses. Mecklenburg County leads the state with nearly 800 announced losses.
Those layoffs could be the a trickle compared to cuts to come, according to economic research firm Moody’s Analytics.
Breaking down job loss projections
Of the 80 million jobs at risk Moody’s Analytics projects that 27 million are at high risk due to the virus, primarily in transportation and travel, leisure and hospitality, temporary help services and oil drilling and extraction. Maybe 20 percent of those workers, comprising about 5 million jobs, will be affected, Zandi said.
The other 52 million jobs are judged to face “moderate risk.” They are in areas such as retail, manufacturing, construction and education. Some 5 million of those workers are could be unemployed or underemployed.
“People are going to be buying less of everything. The stock market is down and wiping out people’s nest eggs,” Zandi said. “They’re worried ‘Am I going to get sick? Are my parents going to get sick?’ That’s a prescription for people going into the bunker and for job losses.”
The shock to the economy could come quickly. When the job changes in the coming week are counted it could show a loss of as many as 1 million jobs, according to Kevin Hassett, the former chairman of the White House Council of Economic Advisors under President Donald Trump.
That would be significantly worse than the 800,000 jobs lost in March 2009, the worst month of the Great Recession. That was also one-month drop in jobs since the US economy shifted off a war footing the month after World War II.
“You’re looking at one of the biggest negative job numbers you’ve ever seen,” Hassett told CNN Monday. He said that even if there isn’t a big increase in firings, the economy needs a certain level of hiring to balance out the normal number of people who are leaving jobs.
“The issue is we think next week….there will be no hires,” he said.
Finding new jobs will be tough for those losing paychecks
Because the United States is now in what is a virtual national hiring freeze, many of those losing their jobs will have trouble finding new ones. A weekly survey of 350 businesses by Moody’s Analytics found that as recently as December 41% of businesses were hiring. As of a Friday survey, that’s down to 12%.
Job placement firm Challenger, Gray and Christmas has seen a similar plunge in businesses looking to hire. Health care companies are looking for help, but most other firms are instituting job freezes, said Andrew Challenger, the firm’s senior vice president.
“Employers stop hiring amid so much uncertainty, when they can’t be certain where their business is going in next few month. We’re going to see those effects on labor beginning to pile up very quickly.”
So far, the percentage of businesses that are furloughing workers hasn’t increased, according to the Moody’s survey. It’s still at 19%, little changed from recent months. But Zandi believes that’s about to radically change.
“Last week it was all about stopping hiring. This coming week it will be about laying off workers,” Zandi said.
The real hit to the economy from the crisis could be in all the small businesses that won’t be able to reopen whenever the crisis ends.
“I think large companies are going to be slower to lay off. They are going to try to get through this,” Zandi said. “But a lot of these small businesses don’t have the cash to weather the storm. It’s not obvious to me how we help them. It’s tough for the government to try to get cash and credit to small businesses.”
Speed of crisis has been tough for small businesses
What is especially tough for many small businesses is how rapidly conditions have changed.
“We were actually at an event last Sunday. We were getting bookings. People were putting down $500 deposits,” said Kansas City food truck operator Dixon.
Two years ago, Dixon spent $90,000 to get his business going with the help of a bank loan that carries a monthly payment of $1,500.
“The payment is due on the 15th of the month. We barely made it this month. We don’t know if we’ll be operating a month from now,” he said.