The economic shutdown triggered by the coronavirus crisis is expected to cost 47 million jobs, according to projections from the Federal Reserve’s St. Louis district, CNBC reports.
Economists at the St. Louis Fed projected that the unemployment rate would rise to 32% this year.
The projections are even worse than St. Louis Fed President Jams Bullard’s warning last week that predicted unemployment would rise to 30%.
“These are very large numbers by historical standards, but this is a rather unique shock that is unlike any other experienced by the U.S. economy in the last 100 years,” said St. Louis Fed economist Miguel Faria-e-Castro.
US is already hemorrhaging jobs:
The news comes after the number of unemployment claims rose to a record 3.3 million last week.
The Dow Jones projects that another 2.65 million will seek unemployment benefits this week.
But the St. Louis Fed projections shows that 66.8 million workers are in “occupations with high risk of layoff.” Another 27.3 million workers are in “high contact-intensive jobs,” like barbers and food workers.
The projections show worse numbers than those caused by the Great Depression, which caused a 24.9% unemployment rate.
St. Louis Fed says jobs will bounce back:
Despite the stark warnings, Bullard said that the job numbers are expected to bounce back after the virus subsides.
“Don’t get discouraged. This is a special quarter, and once the virus goes away and if we play our cards right and keep everything intact, then everyone will go back to work and everything will be fine,” he told CNBC.
Bullard said the economic downturn is nothing like those in the past.
“You’d have this huge spike mostly centered in the second quarter, but everyone knows exactly what that is, that’s pandemic relief that’s done on purpose,” he said. “If we can get this to work right, everything will snap back to normal once this is over.”