Many economists suggest that even with an unprecedented intervention by the federal government and the US Federal Reserve, millions of jobs could be permanently erased within months.
On Thursday, a US government report showed that 281,000 Americans were let go from their jobs the previous week – a 33 percent spike over the last report. But many analysts believe the number is set to skyrocket.
Goldman Sachs economists see initial jobless claims jumping to 2.25 million when data is released next week – an eightfold increase, and also a record. Bank of America sees three million Americans filing for initial unemployment insurance. More conservative estimates are targeting one million jobless claims.
When jobs are lost – even temporarily – financial lives are derailed, placing families and individuals under enormous stress.
Some businesses, though, may never recover, resulting in permanent job losses. It depends on the trajectory of the economy and how quickly it can bounce back from the coronavirus blow.
Goldman Sachs sees US economic growth plummeting 24 percent between April and June and unemployment peaking at 9 percent in the coming months.
Those predictions – like most for the US and global economies of late – could be revised yet again.
Right now, economists believe that the disruption will be temporary for many sectors of the economy and that many people who have been laid off over coronavirus closures will likely have a job again on the other side of this crisis.
But lost wages, sinking investments and insecure futures might extend well beyond 2020.
Sounding the alarm
As lawmakers on Capitol Hill horse trade over what could be a $1 trillion-plus economic stimulus package to offset the ravages of coronavirus, economists are sounding the alarm about the stakes for American workers.
“The measures needed to contain the virus inevitably will reduce demand for a host of services, and there will be massive job losses,” said Brad Setser, a senior fellow for international economics at the Council on Foreign Relations. “It is vital to put in place effective policies to provide income support to those who currently cannot work.”
Setser told Al Jazeera that containing the spread of the virus necessitates measures that will precipitate a steep fall in economic output.
“Once the virus is contained, then the economy should recover,” he said, “but steps need to be taken now to preserve those jobs.”
Robert Scott, a senior economist at the progressive-leaning Economic Policy Institute, says the US needs a “huge fiscal stimulus”. But he does not believe that US President Donald Trump and Congress will produce a package that sufficiently stems the bleeding.
“I’m not betting my pension on it,” he told Al Jazeera.
Scott believes workers are facing a bigger shock than the one delivered by the 2008 financial crisis.
“We lost more than 6.2 percent of total jobs in the Great Recession,” he said, noting that the labour force has swelled since then. “If this recession is only that large, 9.5 million jobs will be lost. I fear that it could be larger,” said Scott, confirming that 10 million job losses is not out of the question.
Scott – like many economists – thinks low-wage service workers will be hit hardest, while higher-wage professional workers in areas such as law, accounting, finance and management will remain employed – with generous sick leave, vacation policies, and the ability to telework.
Scott Sumner, an economist with the libertarian-leaning Mercatus Center at George Mason University, told Al Jazeera that travel, transportation, energy, and services where people interact – such as restaurants and hotels – will be the most severely impacted by job losses. He said that construction and manufacturing could also suffer large layoffs, furloughs and pay reductions.
Sumner is predicting that the economic toll could be “the worst since the 1930s”. However, if a vaccine is commercialised by late 2021, he believes “the duration should be much shorter than the Great Depression”.
Analysts are hedging their forecasts, noting that until the outbreak peaks, it is hard to predict when the US economy will bounce back from the crisis.
Robert Kahn, director of global strategy and global macro at risk advisory and consultancy firm Eurasia Group, told Al Jazeera that because the US economy is “starting from a strong position”, many firms “will try and retain labour”.
Kahn believes the top priority for US officials should be “to address the urgent needs of the sick and vulnerable”, while the US central bank, the Federal Reserve, should keep unleashing crisis-era measures to make sure banks can still extend credit to businesses that need it.
As for workers, Kahn said, “those that can work remotely will do better than those who need high engagement to find or perform work.”
Workers best-positioned to weather the storm
Moody’s Investors Service has compiled a list of sectors it believes have the lowest exposure to COVID-19 fallout including the IT software, telecoms, food and beverage retailers, healthcare and pharmaceuticals.
Daniel, who asked Al Jazeera to withhold his surname to protect his privacy, is a data scientist working under contract for the Social Security Administration. He said his employer has been “very supportive” in challenging times.
“We have a normal work schedule, just remote,” he said. “I don’t see any changes.”
Though he acknowledges his position feels “less secure than [permanent federal] employees”, right now he’s not worried about being laid off.
Antwan, who also asked Al Jazeera to withhold his surname, is a Baltimore truck driver who works for a private transportation company that delivers goods to supermarkets.
“Everything will stop, but they want us to keep coming to work,” he said.
His partner LaToya, who also asked that her full name not be used for privacy reasons, works for mobility company Transdev. She thinks her job is secure, since chemotherapy and dialysis patients will continue needing medical transportation.
“We trust in the Lord,” said Antwan, describing God as a healer and protector. “He’s taken care of us thus far, and he’s gonna continue.”
Daniel Broh-Kahn, a Baltimore liquor store proprietor, told Al Jazeera, “We’re extremely busy,” though there is concern that Maryland Governor Larry Hogan could soon opt to shut down all non-essential establishments, forcing him to lay off his entire staff, all of whom work part-time.
“One of our employees is going to the mountains, the safest place in the country right now,” he said, referring to the US state of West Virginia – the last to register a positive coronavirus case.