The coronavirus pandemic will push the US jobless rate even higher than it was during the Great Depression if all the gloomy forecasts are true, Roger Farmer, an economist at the University of Warwick, believes.
Earlier this week, a US Federal Reserve official predicted that the outbreak will leave 30 percent of Americans jobless while the country’s gross domestic product (GDP) will fall by 50 percent. According to James Bullard, president of the St. Louis branch of the US Federal Reserve Bank, that could happen quite soon – in the second quarter of this year.
“If that turns out to be correct it will be the highest ever recorded. The peak unemployment rate in the US was 24 percent in the depth of the Great Depression,” Professor Farmer told RT.
The economist noted that the decline may be short-term as the situation will start to improve as soon as social isolation ends. Much will depend on the right stimulus, such as direct wage subsidies that can help the economy to rebound.
“If job losses become permanent and employment relationships are destroyed, the recovery will take longer,” the analyst said.
Another forecast released by the developers of the US Private Sector Job Quality Index (JQI) warned that some 37 million workers across the US are vulnerable to layoffs due to the shutdowns triggered by the health crisis. Meanwhile, economists warned that the number of jobless claims are set to surge to historic highs despite government efforts to support businesses.
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