Another 3.169 million Americans applied for initial unemployment claims last week, the Department of Labor reports, as the total now runs up to 33.5 million who have lost their jobs in the government-directed closures of the U.S. economy in response to the COVID-19 pandemic to save as many lives as possible.
Add to that the 5.8 million who already were unemployed a little more than a month ago when unemployment was at a 50-year low of 3.5 percent, and suddenly, horribly the effective rate — different from the reported rate we’ll see tomorrow — could already be 23.7 percent, with about 39.3 million jobless.
For perspective, unemployment peaked in the Great Depression at about 25 percent, but at the present rate of layoffs amid the closures, the U.S. economy could speed past that this week.
And at 33.3 million, we could already be four times the number of job losses from the 2008-2009 recession of 8.3 million. Economic devastation like we are seeing right now has never been seen in modern history.
But the real question, since these are state government-directed closures, is how long the pain will continue even after states begin reopening this month and in June?
The trouble is recessions have momentum to them. It doesn’t really matter why or how they start. You start out at the top of the mountain, at peak employment, with everything looking like it was going great, and then you descend into the valley of a period of time until you hit the bottom.
Again, in modern history, since the end of World War II, in 10 recessions, that period from top to bottom has lasted about 11 months. Can anyone imagine what the economy would look like if these quantities of job losses were to continue for another 10 months? What if it goes on even longer? The last recession, it took 25 months before all the job losses were realized on a net basis. If that happens, there wouldn’t be any economy left to return to.
That is why Americans for Limited Government has launched ReopenAmericaNow.org to urge states to safely reopen their economies now that we are in May and we enter Phase One of the Trump administration’s plan to reopen the country.
The economic devastation can in turn become a mortal threat to liberty, as government intervention takes over for what was just a month ago sheer grit, determination and individual productivity. Now we all just sit around and wait for a return to prosperity that could be years away.
That is not to take anything from the heroic efforts of our nation’s doctors, nurses and medical personnel, and those manning the supplies at our grocery stores, farms and food distribution, who are risking their lives every day to combat the Chinese originated virus and to keep the nation sustained, respectively.
Nor to downplay the significance of the now $2.7 trillion that can be leveraged up to $6 trillion by Congress and the Federal Reserve to save small and large businesses, sustain municipal and corporate bond markets. Those are important.
But are they enough? We are entering a highly uncertain period, mostly because as bad as all the prior recessions have been, it has never been the case that almost the entire global economy has shut down all at once as a matter of public policy. There will be consequences, those that we’ve already seen — and the unintended consequences that remain downstream from our present position.
Unknown factors to do with the 33.3 million job losses figure include how many jobs have been saved by payroll protection since the initial unemployment claims, and therefore how successful the government’s economic rescue has been.
We’ll have more information when the Bureau of Labor Statistics releases the monthly unemployment report on May 8 and when we see how many people remained on unemployment assistance through April with continued claims.
All that said, it is President Donald Trump’s job to be a cheerleader for America and for the economy, and to lead us out of this mess. He needs to be optimistic, that voice of calm in the midst of this storm. The truth is, we need President Trump’s leadership more than ever. As soon as we hit the bottom, we need to bounce back like you’ve never seen, Mr. President.
Robert Romano is the Vice President of Public Policy at Americans for Limited Government.
