The Coronavirus is causing the bottom to drop out of economies all over the world and the US is no exception. First-time unemployment filings rose by 33 percent last week to 281,000 and analysts at Goldman Sachs are forecasting that next week’s report will be even worse. A memo shows the financial company estimate that unemployment filings next week could surge to 2.25 million, an increase of more than 800 percent.
CNN reports that the estimate is based upon announcements of layoffs from numerous industries including airports, hotels, restaurants, and retailers as well as jobs connected with sporting events.
The report also notes that state employment agencies have received a spike in calls. In New York, the Department of Labor, which usually receives 10,000 calls per day, received 159,000 calls before noon. Florida’s Department of Economic Opportunity usually fields 28,000 calls per week, but this week logged 76,000 between Monday and Wednesday. Ironically, the agency plans to hire 100 people to help handle the increased caseload.
In a meeting with Republican senators on Tuesday, Treasury Secretary Steven Mnuchin warned that fallout from the pandemic could cause the unemployment rate to skyrocket to more than 20 percent. That would be the equivalent of 32 million Americans out of work.
The stark numbers underscore Congress’s urgency in passing a relief bill. The Senate and the House are currently dueling over the details of a stimulus plan that would send checks to individual Americans. Republicans are holding out for a means-tested plan that would phase out the benefits for upper-income Americans.
“Senate Republicans have been spending like drunken sailors for several years,” Erick Erickson said of the Republican plan. “They have shown zero fiscal restraint. It is pretty damn impressive that as a virus sweeps across the nation, the private sector goes on lockdown, and the death toll rises that suddenly the GOP is interested in fiscal restraint.”
As CNN noted, the US faces unemployment rates that could potentially rival those of the Great Depression. Massive numbers of unemployed Americans would also bring political and social upheaval that could change the country in unforeseeable ways.
The political fallout is all the more unpredictable because the economic crisis is an Act of God and cannot be laid at the hands of any one party or politician. The duration of the crisis is also uncertain at this point. In the end, the elections may be decided less on the current state of the economy than how incumbents performed during the crisis and its aftermath.