Coronavirus job losses could total 47 million, unemployment rate may hit 32%, Fed estimates
Unemployment Rate – U.S. Federal Reserve said unemployment could reach 32.1%, totaling 47 million people in Q2 2020, eight times more than 4.4% in Q1 2020, and worse than Great Depression
Summary:
- Q2 Forecast – U.S. Federal Reserve Bank of St. Louis on March 30, 2020 estimated close to a third (32.1%) of labor force could be unemployed in near-term, totaling 47 million in Q2 2020, worse than Great Depression
- Latest Unemployment Rate – U.S. Labor Department announced unemployment rate increased to 14.7% in April 2020, from historic low of 3.5% in February and 4.4% in March, with loss of 20.5 million jobs, highest post-World War II
- Jobless Claims – Number of people who claimed to be jobless and filed for unemployment insurance reached nearly 36.5 million between March 16-May 9, 2020, with highest 6.6 million in week ended March 28 alone
- At-Risk Jobs – Include sales, production and food preparation due to social distancing measures, plus high contact occupations such as barbers and hairstylists, food servers, and flight attendants
- Not Included – Fed forecast does not account for workers who drop out of labor force, and effect of government stimulus package, including payroll support for small businesses and unemployment insurance to be implemented up to June 2020
- Bank Forecasts – Investment banks Goldman Sachs, Morgan Stanley and J.P. Morgan each revised unemployment predictions in Q2 2020 to reach 25%, 15.7% and 20% respectively
- Possible Recovery – Fed president James Bullard thinks jobs could still recover once virus ends, and appropriate actions are taken
Companies:
Goldman Sachs
,
J.P. Morgan
,
Morgan Stanley
,
U.S. Federal Reserve Bank of St. Louis
,
UBS
Sources:
- New unemployment claims surge to record-high 6.6 million, Apr 2020 (Vox)
- Back-of-the-Envelope Estimates of Next Quarter’s Unemployment Rate, Mar 2020 (U.S. Federal Reserve Bank of St. Louis)
- US Daily: A Sudden Stop for the US Economy, Mar 2020 (Goldman Sachs)
- Weekly jobless claims total 2.981 million, bringing coronavirus tally to 36.5 million, May 2020 (CNBC)
- Coronavirus job losses could total 47 million, unemployment rate may hit 32%, Fed estimates, Mar 2020 (CNBC)
- Fed’s James Bullard says after a short-term ‘unparalleled’ shock, economy will boom again, Mar 2020 (CNBC)
- US weekly jobless claims spike to a record 3.3 million as the coronavirus outbreak triggers widespread unemployment, Mar 2020 (Business Insider)
- JPMorgan slashes its GDP forecast for next quarter, now sees a 25% contraction and an imminent recession despite ‘Herculean’ stimulus measures, Mar 2020 (Business Insider)
- 7 financial heavyweights have unveiled forecasts for a sudden US recession. Here’s what they had to say about the economic damage coronavirus will cause., Mar 2020 (Markets Insider)
- Morgan Stanley now thinks US GDP will shrink 30% next quarter as coronavirus pushes unemployment to historic highs, Mar 2020 (Markets Insider)
- UBS now sees a deep US recession by July due to the coronavirus pandemic, Mar 2020 (Markets Insider)
Original publication date: March 30, 2020
Date last updated: May 15, 2020