NP/NR Daily: Job losses are coming
The re-preamble: Given what’s going on in the world due to the coronavirus outbreak, I’m sending out a daily newsletter to help keep things in perspective. The news, for the most part, isn’t pretty, and I think it’s important that we all understand what’s going on so that we can make better decisions as to how to deal with it in our lives.
Here we go:
The job losses are arriving.
Weekly jobless claims shot way up, per data from the Labor Department, rising to 281,000 from the 211,000 a week ago. Individual states are getting hammered, too. In Ohio, there was a 2,500% increase in the number of unemployment applications
And this is just the beginning. One economist told CNBC that next week, the national figures could rise from 281,000 to 2 million. Now, a lot of those losing jobs or being furloughed for the time being are those working in places like restaurants or gyms — businesses that have effectively shuttered as the outbreak has spread. But things will likely get worse, and the job losses will cascade into other industries.
This is a reminder, again, to be prepared. Not everyone’s going to lose their jobs, but millions of people likely will in the coming weeks. Be kind, order some takeout from a local restaurant, and help each other out.
How does this compare to 2008-2009?
For some perspective, total job losses during the financial crisis totaled up to 8.8 million, according to government data.
The coronavirus could lead to more than that — at least in 2009, you could go to P.F. Chang’s and throw some money around. We’ll have to see how things shake out, though.
It’s important to keep in mind, too, that the coronavirus outbreak is a different type of animal than the housing bubble and financial crisis. One is a ‘black swan’ — an unlikely, external risk that we’ve been unlucky enough to live through. The other was an internal issue, and one that caused a house of cards to come tumbling down.
The experts I’ve talked to say that, with any luck, the recovery should be much more swift than we saw after the Great Recession.
The good news: The government is finally doing something.
Steve Mnuchin scared the hell out of everyone the other day when he reportedly told Senators that, absent any government intervention, the unemployment rate could reach 20%. Thankfully, that seems to have hit home as policymakers are stepping up, passing a stimulus package that offers free testing, expanded unemployment benefits and sick leave, and possibly a couple of stimulus checks.
The private sector is kicking in, too, to some degree. Walmart, for example, has announced it’s giving out cash bonuses to workers.
So, while it’s likely that we’ll avoid 20% unemployment, we’re still in for a hell of a ride.
Until next time,