United States Federal Reserve analysts said the unemployment rate may soar past 32 percent and the coronavirus freeze on the economy could cost 47 million Americans their jobs.
Economists at the Federal Reserve’s St. Louis district estimated Monday that the coronavirus impact on the economy may lead to 47 million jobs lost, pushing the nationwide total to 52.8 million people when the estimated 5 million already without work are included. This would push the U.S. unemployment rate to 32.1 percent, which is significantly higher than the 24.9 percent rate of unemployment last marked during the worst stretch of the 1930s Great Depression, Forbes noted.
Last week, a record number of Americans filed for unemployment benefits, 3.28 million – more than quadruple the previous record of 695,000 set in 1982. But the Fed analysis shows the worst of the novel coronavirus’ negative effects on the U.S. economy are yet to come.
The Fed’s latest projection of a potential 32.1 percent unemployment rate is slightly worse than the estimate St. Louis Fed President James Bullard released last week of 30 percent. Both sets of data factored in the most at-risk jobs as a result of the government-induced economic freeze across the country which seeks to curb the coronavirus pandemic.
The Fed analysis released Monday encouraged Americans not to stop looking for work and did not factor in any effects of the $2 trillion federal government stimulus passed last week. Previous Fed research showed that 66.8 million workers were in “occupations with high risk of layoff.” The coronavirus lockdown particularly hurts employees who require in-person contact at their jobs as opposed to many white collar positions which can be performed remotely.
As CNBC reported Monday, additional research has categorized 27.3 million people as working in “high contact-intensive” jobs within restaurants, barber shops and airline companies.
“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 Federal Reserve economist Miguel Faria-e-Castro wrote in a research paper published last week.
Providing a slight silver lining, the Fed economists noted that the coronavirus lockdown of the economy is not expected to last long, but is expected to drop off dramatically in the coming weeks.
“You’d have this huge spike mostly centered in the second quarter, but everyone knows exactly what that is, that’s pandemic relief that’s done on purpose. If we can get this to work right, everything will snap back to normal once this is over,” Bullard told CNBC last week.
The number of Americans filing for unemployment benefits is projected to hit a second-straight week of records after the record-setting week ending March 21.