Stifel's Chief Economist Lindsey Piegza joins Yahoo Finance Live to take a closer look into the March jobs report, the state of the U.S. economy, and what this all means for small business owners in light of coronavirus.

Video Transcript

JEN ROGERS: We all know the picture for labor right now is ugly. We had the print this morning that was weaker than expected. We've had two weeks of initial jobless claims that have been just startling-- nearly 10 million Americans filing those claims.

I want to bring in Lindsey Piegza right now-- she's Stifel's Chief Economist-- to talk about the picture, the backdrop, and also the future here. So Lindsey, in a note today, you wrote that more than 45 million Americans are expected to lose their jobs. Unemployment rate potentially peaking near 30%. Those numbers are absolutely staggering. Is that like a bear case? Or is that just your base case?

LINDSEY PIEGZA: That's actually a worst-case scenario. And that's the study coming out of the St. Louis Fed, looking at some of the worst projections that they could anticipate in terms of the labor force. So I don't necessarily think that that's going to actually occur. But this is one of the scenarios that could potentially occur if we continue to see the economy shut in. And we do see somewhere between 45 and 50 million Americans lose their jobs.

So essentially, that is the potential downside. Now, we're certainly hoping that the government allows the economy to open back up in a much shorter time frame, stemming off a number of those unemployment projections. Our base case right now is looking for a decline in growth closer to about 15% to 20%, with a peak in the unemployment rate near 15%. So relative to where we could be, that seems quite optimistic at this point.

MYLES UDLAND: So, Lindsey, I think, you know, part of the problem right now for everybody trying to track where we are in the economy is that every piece-- things are changing so quickly on the ground that every piece of data, you know, it's on its normal lag. But that three weeks lag is such an exaggerated period of time, right, that it seems like it doesn't exactly capture where we're at.

Is there a chance, maybe, that we never get an accurate on-the-ground accounting of where we are? In other words, is there a chance that we get to June and there's actually a soft reopen of the economy, but by the time we get May's unemployment, which will be for the week of May 12, we're looking at 25 million Americans unemployed, but in fact 12 million of them had been re-employed in the last month? And so we're always kind of caught out in this cycle?

LINDSEY PIEGZA: You're absolutely right. As economists, we're always playing catch-up with the data. But in this case, it's increasingly more difficult to play catch-up. As we know, businesses are closed. So that's making it even more challenging to collect the information needed, not just in terms of this morning's employment report, but we look at some of the manufacturing surveys, which typically get over 400 respondents. This time around, we had less than 100.

So, again, it's not only the lag in the survey relative to the reality that we're facing on a day-to-day basis, but it's actually being able to contact businesses and individuals and collect that data. But you're right to the point of this morning's payroll report down 701,000, that's only reflective of 1/10 of the job losses that we know already occurred as a result of looking at the most recent claims data.

So we're going to struggle as much as we can to provide an updated outlook of what's happening in the economy. But there will be just in reality a considerable lag with what we can report and what we're actually seeing.

JEN ROGERS: So today we're seeing some difficulties, some scrambling of people rushing in to apply for the stimulus that's coming from Washington DC. This is for the small businesses out there. How critical, as an economist, do you think every day is here in terms of getting money out? When we see what's happening today, is it, well, it's OK, we'll be able to do it Monday, and it's really not that big of a deal? Or does it concern you that the wheels of trying to get this money out quickly seem to be turning slowly for some?

LINDSEY PIEGZA: Oh, it's a big concern. Every day, every minute matters-- not just for individuals that are living paycheck to paycheck, struggling to pay rent and put food on the table, but for small businesses as well. There was a great survey that came out that showed a tremendous number of small businesses only have about an additional two weeks' worth of capital to keep their doors open. So if those checks don't make it within that two-week period, we could see this exacerbate the number of small businesses that are forced to permanently close their doors.

Now, of course, the federal government is doing the best they can to provide that bridge. But the longer the gap, the more painful this will be and the more long-term the impact will be on businesses, particularly small businesses.

JEN ROGERS: And, Lindsey, we talk about the second wave with the virus sometimes and I'm curious if you can think about it with small businesses. Do you think that we will see small businesses come back on the other side of this when we aren't sheltering in place, but then eventually not be able to make it? Or will the ones that aren't going to make it, will we know kind of right away on the other side when we start going back out and living our lives as we used to?

LINDSEY PIEGZA: Well, it's going to be a very slow recovery. I know there's a lot of optimism for a V-shaped or a hockey stick recovery, or whatever other shape has been put out there. But it's not going to be a flip-the-switch scenario. It's going to take time for businesses to reconnect with workers. It's going to take time for businesses to reconnect with supply chains.

And that's just on the supply side. On the demand side, consumers are going to be equally hesitant to move back out into the marketplace constrained by either lingering fears or crippled personal finances.

So it's going to be a very slow recovery. And we do, to your point, have to remember that we're not coming from a position of strength. The US economy was already losing significant momentum going into 2020 with many small businesses already prepared for large payroll cuts, branch reductions, or outright closures. So there was a number of businesses that were already poised to close their door. Then you layer on this external shock, leaving the economy virtually paralyzed. And we see that downtrend exacerbated.

So on the-- on the flip side, as we begin to recover, it's going to be a very tepid, very slow recovery, meaning that many small businesses, even if they are able to make it through this initial period, meaning April and May, they may not be able to keep their doors open as we look to the end of 2020 and into 2021.

JEN ROGERS: Lindsey Piegza, Stifel's Chief Economist, thank you so much for your time. And I hope you have a good weekend.

LINDSEY PIEGZA: Thank you.