So, It’s Bad

We may end the week with 2.25 million layoffs. We’re not equipped for this.

A street in New York, with signs, cars, and an announcement stating, "Avoid Gatherings. Reduce Crowding. Wash Your Hands." The Manhattan Bridge can be seen farther ahead.
Welcome to our brave new world. Victor J. Blue/Getty Images

I don’t think anybody’s really ready for the shock that’s coursing through the United States economy right now, thanks to the coronavirus. Last week, 281,000 Americans filed for unemployment, an increase of 33 percent. On Thursday morning, the New York Times reported that more than 629,000 had done so this week in just 15 states. Now, Goldman Sachs is estimating that more than 2.25 million people will apply for jobless benefits this week.

It’s hard to process that number. Economically, it feels a little bit like the tidal wave that swallows New York in Deep Impact, which I guess is doubly appropriate given that the city has (like many others) had to shut down most of its daily life to try to slow this disease. The country has never experienced a blow to the labor market this sudden and sharp since it started tracking weekly jobless claims in 1967. The all-time high was 695,000 in 1982, according to the government. It’s as if you took three or so weeks of job losses from the worst of the Great Recession in 2009 and packed them into one. Maybe Goldman is overestimating the casualty numbers here. (It says that’s possible but that even “the most conservative assumptions” suggest there will be more than 1 million job losses.) Either way, well … it’s not good.

A chart showing initial unemployment claims from 1967 through 2020.
Initial unemployment claims. Federal Reserve Bank of St. Louis

As I wrote earlier this week, Congress desperately needs to shore up state unemployment systems, which are already buckling under the strain of new applications. The bill that Senate Republicans introduced Thursday fails to do that, focusing instead on sending Americans insufficient one-time payments in the form of tax rebates that the poorest Americans won’t even be eligible for. It does offer low-interest loans that could help small businesses keep their staff on payroll, though it’s not entirely clear how well or quickly these loans will be rolled out. We need to get more money into laid-off workers’ hands now. The coronavirus already appears to be causing economic carnage and Congress isn’t moving fast enough to help.