For the second week in a row, the nation has posted its highest jobless claims, according to the Department of Labor. With 3.3 million jobless claims reported last week and another 6.6 million announced this week, the number of workers already reporting job losses is now 10 million.
This week’s posting is nearly 3 million jobs more than expected. After a year of unemployment hovering around a half-century low, some plausible estimates have said the rate could exceed even the Great Depression.
Pandemics and the supply shocks that go with them tend to have more robust recoveries than recessions and depressions stemming from underlying structural flaws of the economy. But that only happens when people have jobs to go back to. The sheer magnitude of our job losses as well as the specific industries they’re hitting make this a far more precarious bet.
Internal data from Bank of America confirms the assumption that the industries hardest hit are those with the thinnest profit margins. Obviously, Bank of America found a total collapse of the airline and lodging industries, but those have wide enough profit margins and obvious enough demand that, in due time, they’ll recover. What won’t are restaurants, which have seen daily year-over-year spending fall 56% by the end of March. For clothing, that figure was 65%, and for entertainment, it’s 94%. Visa says that even consumer spending has fallen online.
If our testing, treatment, and mask proliferation ramps up to the point where we can reopen some supply chains and retailers with strict social distancing guidelines and mask-wearing for healthy individuals by May, it’s possible that department stores and restaurants can survive. But those are industries that are already barely breaking even. If months pass and restaurants and retailers can’t make rent, that’s millions of jobs destroyed, permanently.
And if conditions persist for longer, it will eventually start to affect even previously thriving businesses in industries that were not directly affected by the social distancing measures. Laid-off waiters, bartenders, and flight attendants, for instance, will not have the disposable income to spend on other businesses.
Our decision to shut down the country temporarily was the right one, and there’s no doubt that doing nothing would have cost millions of lives and still incurred economic destruction. But this can’t go on forever, and the longer it does last, the further the hopes of a somewhat v-shaped economy recedes into the distance.
