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    Coronavirus losses could total 47 million, unemployment rate may hit 32%.

    From CNBC.com

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    Coronavirus job losses could total 47 million, unemployment rate may hit 32%, Fed estimates

    Published Mon, Mar 30 202011:40 AM EDT Updated an hour ago
    • The coronavirus economic freeze could cost 47 million jobs and send the unemployment rate past 32%, according to St. Louis Fed projections.
    • There are nearly 67 million Americans working in jobs that are at a high risk of layoffs, according to the analysis.
    • St. Louis Fed President James Bullard said last week that the initial estimates are grim but the plunge should be short-lived.

    Millions of Americans already have lost their jobs due to the coronavirus crisis and the worst of the damage is yet to come, according to a Federal Reserve estimate. Economists at the Fed’s St. Louis district project total employment reductions of 47 million, which would translate to a 32.1% unemployment rate, according to a recent analysis of how bad things could get.

    The projections are even worse than St. Louis Fed President James Bullard’s much publicized estimate of 30%. They reflect 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.

    There are a couple of important caveats to what Faria-e-Castro calls “back-of-the-envelope” calculations: They don’t account for workers who may drop out of the labor force, thus bringing down the headline unemployment rate, and they do not estimate the impact of recently passed government stimulus, which will extend unemployment benefits and subsidize companies for not cutting staff.

    However, the jobless picture already looks bleak.

    A record 3.3 million Americans filed jobless claims for the week ended March 21. Economists surveyed by Dow Jones expect another 2.65 million to join them this week. Friday’s nonfarm payrolls count for March is expected to show a decline of just 56,000, but that’s largely due to a statistical distortion because of the sampling period for the count happening before the government implemented social distancing practices.

    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 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%.
    The one potential bright side is the likelihood that the downturn could be comparatively brief.

    During a CNBC interview next week Bullard said the jobless number “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.”

    Source: CNBC.com
    james.c.hendrickson@gmail.com
    202.468.6043

    #2
    I don't think there's any doubt that unemployment will look really bad for a period of time -- but the question is how quickly can things recover? And is there a length of time or a point at which the economy won't be able to recover?

    Comment


      #3
      Its got to be the highest in a decade.
      james.c.hendrickson@gmail.com
      202.468.6043

      Comment


        #4
        will it really recover quickly? How many service jobs will be lost period? Maybe they find other work. Maybe restaurants and stores just don't come back. Maybe airlines and travel companies just don't hire as many back because there is a steep decline for a LONG time because people have lost jobs and have less disposable income to travel. Maybe companies are paying for less business travel because they can't afford it. Maybe people spend money less in general because they lost their job for 4 months but have to "catch" up. Maybe people also stop doing uber/lyft at such a rate because they find other types of jobs like grocery stores etc which pay better? Will realtors lose their jobs because less home buying and lower commissions? Will car sales crater?

        It's a really interesting situation. Economically to predict anything seems difficult.
        LivingAlmostLarge Blog

        Comment


          #5
          I personally hate these doom-and-gloom theoretical estimates of "what could happen." If everyone's calling this unprecedented, how on earth are they making estimates 20% higher than any previous unemployment rate on record? What data validates such extreme guessing?

          Will it be bad? Yes. How bad? No one knows, and it's too soon to reliably or reasonably estimate.
          "Praestantia per minutus" ... "Acta non verba"

          Comment


            #6
            We haven't even seen the tip of the iceberg yet. Most of the 3+ million who filed for unemployment on the most recent report were laid off from their jobs all at once. The question is what happens long term. How many of those jobs simply won't come back?

            Just today, I heard the first business closing news since this started. A minor Orlando-area tourist attraction closed due to the whole Coronavirus thing, along with everyone else. Today, they announced on their Facebook page that they will not be reopening. They've been there for about 8 years, so they weren't super new. Long enough to have established a following.

            In the weeks and months ahead, there will be a deluge of such closings: stores, restaurants, attractions, and more. And not just total closures but altered business operations, too. Virgin Atlantic Airlines announced that they are permanently eliminating their Newark to Heathrow route. Air travel will be back, but I guarantee it won't be back to its pre-COVID status anytime soon.

            A lot of businesses may have appeared successful before this all hit, but this crisis will reveal what was really going on behind the scenes. Many were fueled by debt and/or operating with razor thin margins. Give them zero income for a few weeks or a couple of months and they will face insurmountable issues and down they go.

            The entire economic landscape is going to undergo tremendous changes in the coming months.
            Steve

            * Despite the high cost of living, it remains very popular.
            * Why should I pay for my daughter's education when she already knows everything?
            * There are no shortcuts to anywhere worth going.

            Comment


              #7
              You will see the weaker businesses weeded out by this event. Stronger ones will survive in a leaner fashion with less workers.

              I'd guess that Wall Street will recover rather quickly when this is over.
              Main Street will lag behind as it always does.
              Brian

              Comment


                #8
                Kork I am pretty sure economists are seeing data the regular main street does not. I know for a fact that some economists (my nephew) has said they are already compiling the unemployed stats daily from states who already have the data. And the data is not pretty. Nor is it the complete picture. Many people are not able to file and waiting. Many people are on furlough and not filing. Others are on "vacation/paid" time off. I have a number of friends saying they were asked to use their time off or unpaid leave and go to three days of work from five. They will not be joining the rolls of unemployed but I imagine they might sometime in the next month.
                LivingAlmostLarge Blog

                Comment


                  #9
                  Originally posted by james.hendrickson View Post
                  Its got to be the highest in a decade.
                  you think?
                  Never underestimate the power of stupid people in large groups.

                  -George Carlin

                  Comment


                    #10
                    Originally posted by bjl584 View Post
                    You will see the weaker businesses weeded out by this event. Stronger ones will survive in a leaner fashion with less workers.

                    I'd guess that Wall Street will recover rather quickly when this is over.
                    Main Street will lag behind as it always does.
                    I agree that for some weaker businesses this may not be recoverable.

                    It is very hard to guess what CUSTOMERS will do after stay at home measures are lifted etc.
                    Some customers may find that they did not miss some good or service they were using before... maybe they have to catch up on some bill etc. so they might not go back to their previous spending level for awhile. Maybe some found out how much they were saving eating at home and decide NOT to go back to eating out as much.

                    There are ( IMO) way too many variables to consider. Like so many "models" used on this virus they are only as good as the assumptions put into the equations.
                    Too many things have changed as the world learns more about this virus. Guidelines and some advice are being changed frequently, it seems most were only best guesses at the moment.

                    For example when people were told a person at work might have it...... they only informed those with LONG CLOSE daily exposure, those whom had casual contact were told no problem.... but now some in government / media are saying we can't stand within 6 feet of a stranger in a supermarket for possibly 5 minutes at checkout ?
                    One or both of these assumptions would need to be at least partially wrong.

                    In my area there is a large amount of places hiring and not all grocery or amazon.
                    A few young men that worked for a sub contractor used at my job (laid off 2 weeks ago) were debating whether to apply for another job or just collect unemployment waiting for this job to come back that might have been a viable option for two weeks.... but now that it is stretched out farther the options to change job/ industry may not be as available as it was a couple of weeks ago.

                    Comment


                      #11
                      Also the possibility that people won't have income to go out and spend. That job losses will be significant enough that people can't go back to the life they had. I hear it from well off friends already who have jobs. Talking about how much they lost in the stock market. They are feeling it. Many thought it'd always go up. They only began investing in the last decade though they are my age around 40s. So they hadn't invested through 2000/2001 and 2007/2008. If they had they'd realize that the bull market has been good to us but it had to pull back. I have friends who can't believe it.
                      LivingAlmostLarge Blog

                      Comment


                        #12
                        Originally posted by LivingAlmostLarge View Post
                        Also the possibility that people won't have income to go out and spend. That job losses will be significant enough that people can't go back to the life they had. I hear it from well off friends already who have jobs. Talking about how much they lost in the stock market. They are feeling it. Many thought it'd always go up. They only began investing in the last decade though they are my age around 40s. So they hadn't invested through 2000/2001 and 2007/2008. If they had they'd realize that the bull market has been good to us but it had to pull back. I have friends who can't believe it.
                        I wonder that too.
                        There will no doubt be some cabin fever when this is over, and people will want to vacation, go shopping, go to a baseball game, whatever.
                        But, to what extent?
                        You can only do so much if you don't have a job to go back to.

                        Brian

                        Comment


                          #13
                          Well, over 6 million new claims....
                          Brian

                          Comment


                            #14
                            Originally posted by bjl584 View Post
                            Well, over 6 million new claims....
                            Which really is no surprise. Hardly anyone is working. This is a totally unprecedented event, and it's entirely different than anything that has happened before. Certainly some jobs won't be coming back, and that number will be significant. But there are also millions of people that will be back to work the day the restrictions are lifted. Time will tell how many will fall into each of those categories.
                            Steve

                            * Despite the high cost of living, it remains very popular.
                            * Why should I pay for my daughter's education when she already knows everything?
                            * There are no shortcuts to anywhere worth going.

                            Comment


                              #15
                              is that the peak? Or is there more coming? Is this 10 million unemployment on the early states? Will the rest of the numbers come from states that haven't even started shutting down or being hit?
                              LivingAlmostLarge Blog

                              Comment

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