Coronavirus job losses could reach 47 million with unemployment higher than the Great Depression

Yesterday Trump and Dr. Birx revealed that the best case for the U.S. death toll may be in the realm of 200,000 deaths, that’s assuming we follow strict social distancing for the next month at least. Without shutting everything down, the same models say the death toll could be ten times higher. But everything comes at a price. Today we’re learning what the price could be:

Economists at the Fed’s St. Louis district project total employment reductions of 47 million, which would translate to a 32.1 percent unemployment rate, according to a recent analysis. That figure reflects the high nature of at-risk jobs that ultimately could be lost to a government-induced economic freeze aimed at halting the coronavirus spread.

“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 Miguel Faria-e-Castro wrote in a research paper posted last week…

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 percent unemployment rate would top the Great Depression peak of 24.9 percent.

There are some caveats here. This estimate doesn’t consider those who give up looking for work. That could drive the unemployment rate down but obviously it doesn’t change the participation rate. Also this doesn’t take into account the $2 trillion bill Congress just passed which could help stave off some layoffs.

This estimate was done was by looking at people in what are now considered non-essential jobs. But clearly if we see the unemployment rate skyrocket the general downturn is going to impact a lot more people. If 50 million Americans are out of work that’s a lot less money circulating in the economy to keep everything else afloat. When people are forced to devote everything they have to food and shelter, a lot of other businesses are going to fail.

While all of this is expected to be temporary, it’s probably not going to be over soon. Yesterday President Trump pushed off the date for restarting the economy to May 1 at the earliest. Today Virginia announced it was issuing a stay-at-home order through June 10. Even 2-3 more months of lock down could be a disaster that will take us months or years to recover from.

Obviously the $1,200 checks going out shortly will help for a short period of time, but Congress is going to have to renew that every month to keep the disaster from getting worse.

If this is what it takes to save 2 million Americans’ lives, then we have to do it. That’s nearly 700 times the number of people we lost on 9/11. But tens of millions of Americans are going to pay a very significant price for that effort in terms which are difficult to even begin to add up.

If the various estimates are right, the best case scenario as of now is 200,000 deaths, massive unemployment and trillions of dollars added to the debt. If anyone had said we’d be hoping for those number two months ago they’d have been considered out of their minds, but here we are.

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