- Louis Fed estimates that unemployment rate could pass 32%
- In same analysis, COVID-19 could cost 47M jobs
- Louis Fed said unemployment plunge should be short-lived
We’ve already seen 3.3M people file for unemployment insurance benefits last week. That number is expected to soar this week by another 2.65M, according to economists surveyed by Dow Jones.
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Economists at the St. Louis Federal Reserve district are projected job losses of some 47M. That 47M lost jobs translates into a 32.1% unemployment rate.
“These are very large numbers by historical standards, but this is a rather unique shock that is unlike any other experienced by the US economy in the last 100 years,” wrote St. Louis Fed economist Miguel Faria-e-Castro in a research paper recently posted.
Such compilations come from previous Fed research that shows 66.8M workers in “occupations with high risk of layoff,” such as sales, food prep, services and production workers. Other research indicates another 27.3M workers in “high contact-intensive” jobs such as hair stylists, barbers, airline attendants and food and beverage workers. Averaging out those “high risk” jobs turns into an estimate of 47M positions that would bring unemployment rolls to 52.8M or 3 X worse than the peak of the Great Recession and topping the peak of 24.9% of the Great Depression.
Is there a potential bright spot in such grim projections? James Bullard, president of the St. Louis Fed, said in an interview with CNBC last week that the numbers of unemployed, “will be unparalleled, but don’t get discouraged. This is a special quarter, and once the virus goes away and if we play our cards right and keep everything intact, then everyone will go back to work and everything will be fine.”
Thanks to CNBC.