The coronavirus’s record-breaking run of bad economic news continues unabated. Thursday’s numbers from the Department of Labor reported that 6.6 million Americans filed initial claims for unemployment insurance, roughly the same as last week (which was revised to 6.9 million) and about double the previous week’s tally of 3.3 million.
Add it up, and over the course of three weeks, a total of 16.8 million seasonally adjusted unemployment claims have been filed. If we borrow the math from this Justin Wolfers piece in The New York Times last week, that means somewhere around 15 to 17 percent of the workforce might currently be without a job. (For comparison’s sake, that number was 25 percent at the height of the Great Depression.)
The U.S. has had eight recessions since 1967,1 including the one we are almost certainly in right now.2 Of those, four (1969-70, 1980, 1990-91 and 2001) never reached our current level, over 16 million unemployment claims. For the others, it took a tremendous amount of time to reach that level: between 33 weeks (1981-82) and 51 (1973-75). Even in the Great Recession a decade ago, it took 42 weeks to get 16 million total initial claims. This time around, it has taken three.
This recession is moving at hyperspeed
For U.S. recessions since 1967, number of weeks before reaching each benchmark for total initial unemployment insurance claims
|Weeks before no. of total initial claims|
|Recession of …||3,000,000||9,000,000||16,000,000|
Now, it’s important to remember that the U.S. population has also increased by 66 percent since 1967, meaning there are more workers to potentially file claims now. Furthermore, total initial claims are not equivalent to the number of people who are actually receiving unemployment benefits.3 And, of course, economists look at much more than just unemployment when determining whether a recession has happened.
That said, the sheer job-loss numbers for this recession — and the velocity at which they were amassed — are difficult to comprehend.
Going back to previous recessions, some analysts see parallels to the 1981-82 downturn. That recession is considered to have been triggered by changes in monetary policy, when former Federal Reserve Chairman Paul Volcker aggressively raised interest rates to combat inflation. By comparison, this recession was triggered by widespread stay-at-home orders that effectively shuttered countless businesses and put millions out of work. (We should note that economists almost unanimously agree that this was the best decision not only for public health reasons but also for the long-term economy.) Many jobs were lost in the early 1980s, but the unemployment rate quickly dropped after the initial shock, which may provide a model for people to return to work swiftly after the coronavirus crisis lifts.
Again, though, that early 1980s recession took much longer to reach present levels of jobless claims, so in many ways our current recession represents an unprecedented situation. That’s particularly true when you consider the underlying reason why people can’t go back to work — a novel virus for which a vaccine is still quite far off — and the uncertainty around what its eventual timeline will end up being. One thing is for sure, however: Most of us have never seen a recession produce such extreme economic hardship, so quickly, as what the U.S. is going through right now.