Apr 08, 2020 (IAM Newswire via COMTEX) -- The last two weeks were the worst for the US labor market. Approximately 10 million people lost their jobs. Although this is what we feared, no one expected that it would happen this fast. By the looks of it, the worst possible scenario is becoming true. Ex Federal Reserve President Janet Yellen said she thinks that the current unemployment rate is probably 12% – 13% and that it will continue to rise. If she is right, it means that we crossed the last recession record. Namely, during the crisis of 2008-2009, the unemployment rate was not higher than 10%. But this is not all. She also added she believes that GDP will contract at least 30% in Q2 2020. If this ends up being the case, the US economy will lose approximately 1.6 trillion USD.
How bad is it?
Just to put this number into perspective, Ford Motor /zigman2/quotes/208911460/composite F +6.14% , General Motors /zigman2/quotes/205226835/composite GM +0.31% , Fiat Chrysler /zigman2/quotes/204248628/composite FCAU +0.51% , Toyota Motor Corporation /zigman2/quotes/200537742/composite TM -0.44% , Honda Motor Co. /zigman2/quotes/207173990/composite HMC -0.26% , Volkswagen AG /zigman2/quotes/204431732/delayed VWAGY +0.12% , Hyundai Motor Company /zigman2/quotes/204364212/delayed HYMTF -1.06% had combined yearly revenues that amounted to approximately 1.2 trillion USD last year.
Carmakers are not immune to the crisis of this magnitude
Light vehicle sales in March 2020 fell approximately 37%. This fall will probably continue in April. The number of infected people and COVID-19 victims in the US is rising exponentially every day. President Trump recently warned us all by saying that "very, very painful two or three weeks" are ahead. Those are clear signs that the economy will not reopen until the end of April, maybe even longer if the curve does not start to flatten soon. Consequently, carmakers decided to join the crowd in this massive layoffs' stampede.
Nissan Motor Co /zigman2/quotes/207656007/delayed NSANY -3.51% announced it plans to lay off about 10,000 people. Plants in Mississippi and Tennessee will be affected by those measures. Nissan invested a lot of money there to produce SUVs, sedans and electric cars but factories are idled due to the COVID outbreak. They will not reopen until the end of April. Consequently, management decided to dismiss production workers. In the meantime, people will get unemployment benefits. The company said it will hire them again when production restarts.
Honda Motor Co. officials said they will place more than half of all US employees on temporary leave. In other words, the number of workers will fall from 20,000 to only 10,000 until the end of April. The crisis forced Honda to lay off full-time employees even in Ohio. Unprecedented move that never happened so far. Since the company started producing motorcycles in Ohio, back in 1979, it never happened that Honda laid off full-time production workers in this factory. It was something the company was so proud of. Unfortunately, this move was inevitable this time. The carmaker instructed employees to apply for state and federal unemployment benefits.
Last week Tesla Inc /zigman2/quotes/203558040/composite TSLA -2.10% also said it will reduce the number of workers in its factory in Reno, Nevada by 75%. Yes, it is quite brutal.
To sum up, layoffs firstly happened in retail business, hotels and restaurants. Now it started to happen in the automotive industry as well. Fasten your seat belt, unpaved road might be ahead!
This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: email@example.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: firstname.lastname@example.org Questions about this release can be send to email@example.com