Coronavirus: US unemployment rate could hit 30%
The COVID-19 outbreak is having a huge impact on jobs across the US. Image: REUTERS/Edgar Su
Get involved with our crowdsourced digital platform to deliver impact at scale
Stay up to date:
United States
- COVID-19 could see unemployment rise to levels higher than the Great Depression, with GDP falling by 50%.
- James Bullard, president of the St. Louis branch of the US Federal Reserve Bank predicted the unemployment rate will reach 30% in the second quarter.
James Bullard, president of the St. Louis branch of the US Federal Reserve Bank, has a bleak assessment of how coronavirus will impact the US economy in the short-term.
In a Sunday interview with Bloomberg, Bullard predicted that the unemployment rate will reach 30% in the second quarter, and gross domestic product will fall by 50%.
US unemployment was at its worst during the peak of the Great Depression in 1933, when the jobless rate spiked to 24.5%. In the aftermath of the Great Recession, US unemployment peaked at 10.2% in October 2009, according to the Bureau of Labor Statistics.
As cities and entire states enact mandatory social distancing measures, many businesses in the US, especially in the restaurant and hospitality industry, have been forced to close. Many have already begun laying off staff or halting their paychecks. The Labor Department reported that 281,000 Americans filed for unemployment last week, a sharp increase of 70,000 from the prior week.
Forecasters have varied in their estimates of the US job market’s suffering as a result of the pandemic. The first concrete data for job losses in March, estimated to range from 500,000 to 5 million jobs lost, will be reported April 3.
In order to weather the economic storm, Bullard stressed that a strong fiscal response and backing from the federal government would be needed in the coming months.
“This is a planned, organized partial shutdown of the US economy in the second quarter,” Bullard said. “The overall goal is to keep everyone, households and businesses, whole” with government support. “It is a huge shock and we are trying to cope with it and keep it under control.”
Bullard stressed that “everything is on the table” for the Federal Reserve as far as additional lending programs. Over the past week, the Fed has pulled seemingly every tool in its arsenal in order to calm a volatile stock market, including slashing interest rates and vowing to purchase as much as $700 billion in Treasury and mortgage-backed securities in the coming months.
Don't miss any update on this topic
Create a free account and access your personalized content collection with our latest publications and analyses.
License and Republishing
World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.
The views expressed in this article are those of the author alone and not the World Economic Forum.
Related topics:
The Agenda Weekly
A weekly update of the most important issues driving the global agenda
You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.
More on Health and Healthcare SystemsSee all
Kate Whiting
October 14, 2024
Shyam Bishen
October 10, 2024
Shyam Bishen
October 10, 2024
Manica Balasegaram
October 10, 2024
Dr George Cheriyan
October 8, 2024
Simon Torkington
October 8, 2024