Today’s initial jobless claims reflects the accelerating closure of commerce as Americans quickly embrace social distancing and face stay-at-home orders in a rapidly widening number of states, says Michael Hicks, director of the Center for Business and Economic Research at Ball State University.
The Labor Department announced this morning that 6.648 million people filed for unemployment benefits last week — doubling the record set a week earlier.
“In the short term, this is naturally very frightening to economy watchers, but viewed over the medium or long term suggests a quickening of job losses which would otherwise have slowly occurred throughout the Spring and Summer,” Hicks said. “The fundamentals have not changed. Roughly 28 million workers are at risk of job losses through their employment in businesses which directly interact with the public.
“These job numbers are not a sign of things getting worse, I think it is a sign of a more forceful response by households, businesses and state and local governments”
In a recent study, “What Will the Next Three Months Look Like? Simulating the Impact of Social Distancing on GDP and Employment,” Hicks analyzed how COVID-19 and social distancing will impact the economy. He found that extreme social distancing occurring in the United States is more than sufficient to create a recession as mass layoffs cause unemployment to exceed 10.5 percent nationally with 45 days.
And, within 90 days, the economic downturn caused by governmental efforts to mitigate the novel coronavirus will cause unemployment to rise to 14.6 percent nationally.
“These are likely very conservative estimates, yet it argues that job losses in March, April, May, and June may be the four largest in US history, topping the 1.9 million jobs lost in the weeks following V-J Day in September 1945,” Hicks said “This level of job losses does not consider the effect of school closures on labor supply by households. This study does not assess the impact of supply chain disruptions on manufacturing, nor does it include the extreme shock to household wealth caused by stock market declines.”