'A truly terrible outcome': Why one economist sees zero chance of a V-shaped recovery after April's dismal jobs report

• April's dismal job report means there's no chance for swift US economic recovery, James Knightley, chief economist at ING, wrote in a Friday note.
• "With social distancing, consumer angst, travel restrictions and the depressing effects of mass unemployment mean that economic activity and employment will certainly not be exhibiting a V-shaped recovery," Knightley said.
• He expects the unemployment rate, which surged to 14.7% in April, to remain elevated through the end of the year.
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April's jobs report showed that the US labor market has been devastated by the coronavirus pandemic. It also casts doubt on a swift economic recovery.

The US economy lost 20.5 million jobs last month, and the unemployment rate spiked to 14.7%, according to the report Friday from the Labor Department.

It's a "truly terrible outcome resulting from Covid-19 containment measures," James Knightley, chief international economist at ING, wrote in a Friday note.

Labor force participation dropped to a record low of 51.3% in April, and Knightely expects that it will slump below 50% in May. This means that in one month, fewer than half of American workers will have a paycheck, according to an earlier analysis by Knightley.

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This doesn't bode well for the future US economic recovery, according to the report.

"With social distancing, consumer angst, travel restrictions and the depressing effects of mass unemployment mean that economic activity and employment will certainly not be exhibiting a V-shaped recovery," Knightley said.

While hiring is likely to return in May as some states begin to slowly reopen their economies, it will be tentative at first, according to the report.

"We also must consider whether consumers remain somewhat anxious about returning to normal life given the health concerns, while the legacy of 30-40 million unemployed people means that there will naturally be less demand as many households are forced to retrench," he wrote.

Even as businesses reopen, they won't need as many workers as they did before the coronavirus crisis shut down nonessential businesses.

"If we can get unemployment back down to 8-10% by year-end that would likely be a 'good' outcome," he wrote.