Unemployment could rival numbers previously seen during the Great Depression.
Many of the United States are trying to put plans in motion to gradually reopen their economies. Businesses are gradually reopening, albeit with strict social distancing and hygienic requirements in place, and more people are venturing outside, face masks equipped. Unfortunately, the damage has already been done by the months of seclusion, and according to Goldman Sachs predictions, things are going to get worse before they get better.
Currently, approximately 30 million Americans have filed for unemployment during the pandemic, with people suffering either reduced hours or lost jobs entirely. This has set the unemployment rate at a worrisome 15%. Based on Goldman Sachs projections, if this downward spiral were to continue on its current trajectory, we could see unemployment rates of up to 25% this year, numbers that have not been seen since the Great Depression in 1929. Factoring in those who can only find part-time work in their field and those who are discouraged from leaving the house by viral fears, over a third of working-age adults could be unemployed.
“[P]rolonged weakness could cause severe scarring effects such as permanent layoffs and business closures that delay the recovery,” Goldman Sachs economists said.
With businesses attempting to reopen, things may improve slightly in the second half of 2020, but Goldman Sachs believes the unemployment rate won’t go any lower than 10%, around the same high as 2009’s recession. A return to the US’ pre-pandemic economic state will very likely take multiple years.
“The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II,” Federal Reserve Chairman Jerome Powell said Wednesday during a webcast for the Peterson Institute of International Economics. “Already the job gains of the past decade have been erased.” Powell went on to note that almost 40% of lower-income households experienced at least one job loss in March. “This reversal of economic fortune has caused a level of pain that is hard to capture in words, as lives are upended amid great uncertainty about the future.”