• 2.1 million Americans were added to unemployment rolls last week
  • The unemployment rate was expected to hit 20% when the report comes out at the end of next week
  • Many of the layoffs that started out as temporary may become permanent as companies find they're short on funds for gearing back up

With 40 million Americans seeking unemployment benefits, experts said Thursday President Trump’s hoped-for V-shaped economic recovery from the coronavirus pandemic is unlikely to materialize.

The Bureau of Economic Analysis Thursday revised the first quarter gross domestic product growth rate to a negative 5% annual rate. The second quarter is expected contraction is expected to be 40%.

In its quarterly forecast, the Federal Reserve Bank of Philadelphia predicted earlier this month a labor market recovery will begin in the third quarter, but the pace of monthly job gains will lag far behind the pace of the job losses we’ve seen since much of the economy shut down in mid-March.

The latest report from the Bureau of Labor Statistics indicated 2.1 million Americans filed for unemployment benefits last week, bringing to more than 40 million the number of filings since the pandemic began ravaging the economy. The May unemployment rate will be released June 5 and is expected to show 20% of the U.S. workforce on the dole.

It was the 10th week unemployment claims more than tripled the worst week of the Great Recession.

Mercatus economist Michael D. Farren told IBTimes even with unprecedented job growth of a projected 2 million a month, it would take a long time to restore the economy.

“The forecasts of future job increases from the Philadelphia Fed reinforces the idea that the recovery will be swifter than from a typical recession, and that we aren't headed toward another lingering depression,” he said. “The fact that most workers are on temporary furlough from their jobs, rather than permanent layoff, supports this.”

But Diane Swonk, chief economist at Grant Thornton, noted the Federal Reserve’s Beige Book pointed out many of the layoffs that started as temporary are likely to become permanent as companies discover they don’t have the money to ramp up fully. Complicating the situation further is fear of returning to a job where one could become infected and a lack of child care.

Unemployment insurance expert Andrew Stettner, senior fellow at the Century Foundation, said the economy will crawl its way out of recession, not leap.

"In coming months, jobs reports may show payrolls increasing or new unemployment claims decreasing. But this is really a mirage, not an example of the economy climbing out of recession,” he said. “The depth of job losses will squelch economic demand and require months, if not years, of recovery, especially since many companies won't have the finances or customers to come back quickly, if at all."

Finance Professor Robert Johnson at the Heider College of Business at Creighton University said any predictions about the third and fourth quarters are just “wild ass guesses.”

“There is so much uncertainty going forward regarding the future path of the pandemic, that forecasts are essentially worthless. The range of possibilities is virtually limitless. Clarity regarding the future of the economy will come as a result of medical developments. It will take a while to determine if reopening the economy was prudent,” he said.