Over 3 million Americans filed for unemployment last week, a total that doesn't include gig-economy workers who aren't formally employed, but the worst is still coming according to the Federal Reserve of St. Louis.
The local Fed branch released estimates that include a projection that nearly 50 million people will lose their jobs and unemployment will reach an all-time record high worse than during the Great Depression.
“These are very large numbers by historical standards, but this is a rather unique shock that is unlike any other experienced by the U.S. economy in the last 100 years,” St. Louis Fed economist Miquel Faria-e-Castro wrote in a research paper posted last week. [...]
The central part of Faria-e-Castro’s compilations comes from previous Fed research showing 66.8 million workers in “occupations with high risk of layoff.” They are sales, production, food preparation and services. Other research also identified people 27.3 million people working in “high contact-intensive” jobs such as barbers and stylists, airline attendants, and food and beverage service.
The paper then took an average of those workers and estimated a loss of just over 47 million positions. That would bring the U.S. unemployment rolls to 52.8 million, or more than three times worse than the peak of the Great Recession. The 30% unemployment rate would top the Great Depression peak of 24.9%.
In related news, nearly 50 percent of companies surveyed say they're considering layoffs over the next three months which is likely how long stay-at-home quarantine orders are going to last if we're being realistic.
That’s from an online survey of more than 250 companies, varying in size and sector, conducted from March 20–26 by Challenger, Gray & Christmas, the oldest outplacement firm in the U.S., which works with companies on transitions services for employees.
Forty-nine percent of companies told Challenger, Gray & Christmas they are very or somewhat likely to conduct layoffs in the next three months, while 11% reported they have conducted permanent layoffs; another 7% have conducted temporary layoffs.
I think it's fairly clear that the $2 trillion aid package passed by Congress last week isn't going to be enough, but Congress is not scheduled to return to Washington until nearly the end of April if they return at all. At least the damage should be slightly more quantifiable by then.
At this point, Trump himself should hope that he's not reelected because this disaster will be an all-consuming one for at least the next year if not longer and the next president is going to have to make a lot of uncomfortable choices to even begin to pick up the pieces of what's left.
For starters, raising taxes will be absolutely necessary and that will only cover what we're spending today before the next administration can even think about other progressive policies. The Congressional Budget Office (CBO) estimated that the federal deficit for fiscal 2021 would be $1.3 trillion and that obviously did not include what we're spending to fight the virus or the massive drop in revenue stemming from lost business that is undoubtedly coming. It is not hard to imagine the next president will enter office with a $2 trillion deficit.
As voters and Democrats we will likely have to make uncomfortable choices, too. Recovering from this will require compromises, but I'm confident that the right administration can find the right balance. The right administration being a Democratic one, of course. Another four years of Trump might doom the planet if the first four didn't.