The Bureau of Labor Statistics job report released last week shows an unemployment rate of 14.7%, giving economists a glimpse at the damage and what’s likely to come.
“We’re looking at much bigger economic damages than anybody ever thought even three weeks or a month ago,” said Michael Hicks, an economist at Ball State University.
According to the report from the Bureau of Labor Statistics, over 20 million Americans lost jobs between March and mid-April. That’s the largest monthly increase in history, but Hicks says the real unemployment rate is likely higher once you add in the last few weeks.
“If we had real-time data, we’d probably be seeing an unemployment rate closer to 22%, 23% right now, which is knocking on the door of the worst and darkest part of the Great Depression,” Hicks said.
In the survey, about 90% of newly unemployed workers said they were temporarily laid off. However, Hicks warns that even as states open back up, many jobs won’t be back anytime soon.
“Until the disease is eradicated or until there’s a vaccine for it, we’re going to face significantly lower levels of economic activity,” Hicks said. “And that’s at least six months, eight months from now. It could be closer to 18 months that we will be facing double-digit unemployment rates.”
While Hicks says the situation is not as bad as the Great Depression, it’s still the worst economic downturn many Americans have faced in their lifetime. College graduates will have to face it right away.
“This is going to persist not just for the class of ’20, but the class of ’21 I think is going to face a significant hiring shortfall,” Hicks said.
As Americans continue fighting to flatten the curve, once the virus is gone, work will begin to flatten another.
“We should expect this economic challenge that’s before us to be much worse than anything we’ve seen in the post-World War 2 period,” Hicks said. “I think we’re looking at the edge of a depression, not a recession.”