An Economic Perspective On The Newest Unemployment Numbers
STEVE INSKEEP, HOST:
We now have an idea how many Americans lost their jobs last week alone. The Labor Department says about 6.6 million people applied for unemployment. Again, that is in one week, and that is roughly double the number of the previous week, and the previous week was many times the previous record - many, many times. David Wessel of the Hutchins Center at the Brookings Institution is with us once again. David, good morning.
DAVID WESSEL, BYLINE: Good morning, Steve.
INSKEEP: I can remember talking to you during the Great Recession and being horrified that half a million people or so had lost their jobs in a single week, and it was happening week after week. We seem to be at an entirely different level now.
WESSEL: Absolutely. We've never seen anything like this before. More people have filed for unemployment benefits in the past two weeks than in the first six months of the Great Recession a decade ago, and there's every reason to believe this is an undercount of the people who've actually lost their jobs. I mean, there is - this is what happens when you tell so many people to stay home and so many employers to shut down.
One silver lining here, if you want to call it that, is that despite all the reports of computer systems crashing and long phone waits at state unemployment offices, that 6.6 million people did actually get through and file their claims last week.
INSKEEP: Oh, which is impressive...
WESSEL: Now, it's important to remember...
INSKEEP: It's impressive and yet also shocking because that implies there must be some other people who are still waiting, who didn't get through, who haven't had their chance and aren't among the 6.6 million.
WESSEL: Absolutely. Now, the good news, if there is some, is that Congress moved pretty quickly to provide loans and grants to employers to encourage more of them to keep workers on the payroll. Those programs haven't kicked in yet. So there is some response coming from the government. It just can't be as quick as we need given how severe and abrupt the recession is.
INSKEEP: OK. I guess there are two big forms of federal aid that are most relevant here, one you just mentioned, and that is help for companies that choose to keep people on the payroll. Unemployment benefits themselves have been expanded, right?
WESSEL: That's right. In normal times, only 1 of every 4 unemployed workers qualifies for the benefits. Congress has expanded the program greatly to cover gig workers, freelancers, part-timers and contractors. And it is said that the federal government will add $600 a week temporarily to every unemployment check for the next few months, and that's retroactive. So even if you didn't get through this week, you'll still get the money eventually.
That's going to make a huge difference to jobless workers and to the overall economy. And I suspect that the - all this attention to the unemployment benefits system has encouraged people to realize that they may be eligible and to apply.
INSKEEP: Couple of questions about the scale of what we're facing here. First, this epidemic, of course, this pandemic is terrible in country after country, but a few countries have managed to fend it off so far for the most part. Japan comes to mind, South Korea - some big economies. Are there any bright spots anywhere in the world, or are we looking at a global recession?
WESSEL: We're definitely looking at a global recession. Yes, it's good that some countries managed to get on top of this sooner than we did. Taiwan is another example. But this is going to be a really bad patch for the world economy. The first phase, of course, is to win the war against the virus, which is why so many people are being told to stay home. But how long it takes us to come out of this and how vigorous the recovery really does depend on what we do now to keep the economy intact.
So rich countries like the U.S. and Japan and the U.K. can borrow and can afford to do this. The ones who are going to be really hard hit, I think, are low-income and emerging market economies. They don't have the resources. The capital is flowing out of them at an astounding pace. They're going to need help from the International Monetary Fund and the World Bank, and that's going to be a big focus of their meetings here, which will be virtual, later this month.
INSKEEP: I guess one thing that can sustain people, if it's true, is the hope that this economic disaster will not last as long as recessions typically do. I saw this forecast from Goldman Sachs that called for a disastrous, unbelievably disastrous second quarter, but a better third quarter. Is the government response right now sufficient to head toward that?
WESSEL: We don't really know. It certainly will help, but a lot depends on the course of the virus. The economists who are forecasting a second half rebound are counting on us all going back to work, or many of us, in July and August. And I don't think we know yet whether that's going to be the case.
INSKEEP: We just don't have the information because it is up to the efforts at social distancing and when officials would say that is possible to end. Is that what you're telling me?
WESSEL: Yeah, absolutely. I mean, that's what makes this so hard to forecast. It's not like any kind of recession that we've seen before. The government has aggressively pulled the plug on the economy, and they keep changing their mind about when they think they're going to put the plug back in, which is reasonable given this - given how the virus is proceeding. So unfortunately, there's a lot of uncertainty.
INSKEEP: David, thanks for your insights always.
WESSEL: You're welcome.
INSKEEP: David Wessel of the Hutchins Center at the Brookings Institution.
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