These are the industries hardest hit in the March jobs report

EPI Senior Economist Elise Gould joins Yahoo Finance’s Zack Guzman to discuss the grim March jobs report and employment in leisure and hospitality falling by 459k.

Video Transcript

ZACK GUZMAN: Of course, the big story today, though, big jobs Friday delivering a more of a muted result than what we're used to around here, though it does come in the wake of some record unemployment claims numbers that we have been seeing. We brought that to you yesterday.

And today, the update that we're getting brought the first monthly drop in hiring in nearly 10 years. That stretching all the way back to September 2010. We got the non-farm payrolls number for March, showing job losses of 701,000 versus 100,000 economists had been expecting. The unemployment rate for March dipping to 4.4%, down even below what economists were expecting at 3.8% and the 3.5% unemployment rate number we had posted back in February.

Going to jump right into what that all means, though, in terms of where the economy is heading from here and how to put that number into context, which a lot of people were already expecting things were going to be bad. But what happens from here is the question. For more on that, I want to bring on Elise Gould. She's EPI's senior economist, and she joins us now on the Hangout.

And Elise, what was your first reaction to the number? Of course, we got those monster unemployment claims number heading into this. But what do you make of it, and what do you think happens next year?

ELISE GOULD: Well, I have to say that my first response was, wow, that was much larger than people had thought. The losses of 700,000, 701,000, 713,000 private sector jobs lost-- that is bigger than people expected. We knew it was going to be bad. We expect that the report for April will be much worse and didn't think that it would hit this early yet.

ZACK GUZMAN: And when we look at it, too, on a sector basis, leisure and hospitality lost more than 450,000 jobs in March after gaining 44,000. Last month in February, you also saw education and health services industries get hit by a wide margin as well, losing 76,000 jobs in March.

So I mean, what do you take from that? Because, of course, we've seen some drawdowns in manufacturing and some other hard-hit sectors before. But the shift there-- I mean, leisure and hospitality, when you think about it, those are the-- those are the industries we were worried about, and probably making up a bulk of those unemployment claims as well. But I mean, just the numbers are kind of shocking here.

ELISE GOULD: Yes, absolutely. I couldn't agree more. Leisure and hospitality is where we saw the largest losses, that the vast majority of that 700,000 losses came in leisure and hospitality. And of that, most of them were in food services and drinking places. So those places that we're seeing that are shutting down left and right, we're going to see those numbers only get worse in the coming months.

ZACK GUZMAN: And when we talk about that, I mean, Morgan Stanley was out with a note today saying that they see Q1 GDP dropping by 3.4%. That was worse than what they originally had projected at 2.4%, the drop there, as well as economic activity. When you look past it, Q2, they're projecting a drop of 38%. That even worse than their previous 30% estimate.

So when you look out past Q1 and as we get into kind of this dire situation we're expecting in Q2-- I mean, we've seen the process here with the stimulus measure, relief measure, some people want to call it instead. I mean, when you look at that, I think it's pretty fair to say people are losing hope that that's going to be enough to kind of blunt the pain that's coming in Q2.

ELISE GOULD: I think that's absolutely right. I think that things have gotten worse. Every day, every week, you're seeing predictions that come out that show even larger losses, even a larger drop to GDP. That's going to reflect even larger employment losses.

So the estimates, if you turn them into employment numbers, we're talking about about 20 million fewer jobs by this summer. And that is with the package, the stimulus, the recovery, the relief that has already happened. So then more needs to be done. Policymakers need to come back and put together a fourth package to make sure that Americans are protected, they can get through this period, and then we can stimulate the economy when we get on the other side of this pandemic.

ZACK GUZMAN: I mean, when you talk about that, too, I mean, I guess there was that little boost we saw as we were wrapping up March. We did see the market come back a little. A lot of people were talking about how that might have been kind of giving too much credit to the stimulus bill and what kind of the impacts might be there. Other people were saying, oh, that could be, too, you know, portfolio rebalancing here. But I think it's fair to say that a lot of the expectations that that bill is going to be able to stop kind of the job losses we're talking about here-- I think that's losing steam, especially when we start looking at what the unemployment expectations will be moving forward. I mean, it sounded large that we would be matching the 10% unemployment that we saw back in the Great Recession. But now as we're getting these record jobless claims number-- of course, more up to date than the overall jobs report we got today-- I mean, that's just shattering everything that we've seen before. So you would expect, I would assume, unemployment to go up far beyond 10% moving forward.

ELISE GOULD: Yeah, it may be terrible, may be the worst recession since the Great Depression. I think that we are on track right now to see even greater losses. This is incredibly concerning.

It's hard to know what the counterfactual would be without the measures that Congress has already taken, but it is clear that they need to take more measures to protect Americans so that they can keep paying their rent and putting food on the table. People are going to be struggling during this time, and we need to do whatever we can. I think the unemployment insurance benefits-- those expansions are going to help millions of people across the country. And we need to continue to do more.

BRIAN CHEUNG: Hey, Elise, it's Brian Cheung. So I've been trying to parse through the jobless claims numbers from yesterday and the unemployment rate from today. And what's interesting about them is that not everyone that necessarily was counted under today's number was actually able to get through a phone line to actually claim unemployment insurance. So from your vantage point, what did you gather from the report today when in conjunction with yesterday you're trying to figure out what is the amount of people who were boxed out of being able to access UI and how high truly is the-- is the number here of people that lost their jobs?

ELISE GOULD: Yeah, I think we're still very much at the tip of the iceberg. I think the numbers are higher than a lot of people thought because maybe there was some delay in being able to make those claims. And so there were more claims that were attempted, or more people are eligible before they actually applied.

There were some technical problems that people had with applying for those unemployment insurance claims, and so that could lead to a little bit of a delay in those data. And that's why I think this was more surprising today. But there is much more pain to come, unfortunately.

ZACK GUZMAN: All right. Elise Gould bringing us her thoughts there. Appreciate you taking the time to chat with us this morning.

ELISE GOULD: Thank you.