On March 26, unemployment offices around the country reported an astonishing 3.3 million people filing for jobless claims in the week ending on March 21, utterly smashing all previously weekly numbers.
Then this week's numbers completely smashed that record: 6.6 million jobless claims for the week ending on March 28.
In total, this amounts to almost 10 million jobs lost — enough to raise unemployment 6.5 percentage points, and bring the national unemployment rate back to the 10 percent we saw at the height of the Great Recession. It took the 2008 housing collapse almost two years to throw that many Americans out of work. The coronavirus did the same amount of damage in two weeks.
It will get worse.
There's a huge backlog of jobs already lost that have yet to be recorded. The throughput that state unemployment offices are dealing with right now is well beyond what they're capable of handling. Gig economy workers, independent contractors, and other Americans who aren't classified as full-time employees cannot yet collect unemployment benefits either — though the CARES Act that Congress just passed will change that as it goes into effect.
Furthermore, unemployment breeds unemployment. People who lose their jobs cannot spend nearly as much money in the economy, depriving businesses of the revenue they need to survive, leading to even more layoffs, and downward spiral that feeds on itself. The latest projections from Goldman Sachs anticipate almost 20 million jobs lost by July, which would bring the national unemployment rate to 15.6 percent. Crucially and horrifyingly, these projections include the counter-effect of the economic aid Congress already authorized.
Even those estimates are likely too rosy. The coronavirus crisis has a nasty habit of transforming worst-case scenarios into mid-range forecasts in a matter of days, and the Federal Reserve Bank of St. Louis has already projected the unemployment rate could peak at 32 percent. For comparison, the Great Depression peaked at 25 percent.
I'm honestly running out of adjectives here, though "apocalyptic" comes to mind. The speed and scale of this economic catastrophe is almost hallucinatory.
Needless to say, the government's efforts to combat the disaster have been woefully inadequate thus far. We never dealt with the economic hole from 2008's Great Recession properly, and sufficiently responding to a repeat of that would require something on the order of $3 trillion. That's hundreds of billions more than Congress has passed between its three "phases" of coronavirus response, including the whopping $2.2 trillion in the CARES Act. And what we're dealing with now is clearly far worse than 2008. Congress will need to spend trillions more.
First, the $1,200 in cash aid Congress sent out to every adult needs to be transformed into recurring monthly disbursements rather than a one-time thing. We also need to stand up some sort of public banking option for all. Unfortunately, there's no fast way to do that, but once it's done, the government would have an organized database of everyone it needs to send money to, and less-privileged Americans would be able to get their aid as rapidly as the rest of us. Remarkably, Congress did manage to pass a really robust expansion of unemployment benefits that will last for four months; but that will likely need to go longer, too.
Another thing we need to do is help businesses stay whole, and stem the tide of further job loss. Other countries like Denmark have shown how to do this right: the government there basically became the "payer-of-last resort," replacing firms' lost revenue with ongoing money grants, so they can keep meeting bills and overhead and keep all their workers on payroll. America's closest equivalent is the small business aid package in the CARES Act, which gives companies low-interest loans to meet all those costs, and forgives those loans if the firm doesn't lay anyone off — effectively turning the loan into free money. Unfortunately, the $377 billion Congress dedicated to financing this plan will not be nearly enough to meet the scale of what's needed. That number needs to be cranked way up as well.
Finally, state budgets are about to get destroyed by the coronavirus crisis, and will need massive amounts of aid to prevent a wave of austerity that will make the downturn worse. This can and should come as both direct grants from Congress, and much more direct support for state and local debt from the Federal Reserve.
We should acknowledge an important distinction here: What we're talking about is not really "stimulus," but "relief." As horrific as the unemployment numbers are, they are to a large extent a necessary function of containing the coronavirus — the economic equivalent of a medically-induced coma. What we're doing right now is making sure the economic body doesn't die while it's in that coma. Once the virus has been contained, then it will be time for traditional stimulus, to try and drive the economy and employment back to full capacity as quickly as possible.
The ideal way to do that would be something like a Green New Deal: We need to tackle the climate crisis anyway, and the massive hiring and public investment necessary would fit the bill for a post-coronavirus stimulus. That's probably more than we can hope for from the ideologically-blinkered GOP. But happily the White House and Congressional Democrats are at least discussing a big infrastructure investment, possibly as large as $2 trillion. The key trick here will be timing: Pass the bill now, yes, but understand it cannot go into effect until everyone can safely return to work.
But while there's talk of stimulus, no one seems to be talking about further relief spending at all. Senate Majority Leader Mitch McConnell (R-Ky.) and other Congressional Republicans are dragging their feet, suggesting we wait to see what happens with the spending already enacted. House Speaker Nancy Pelosi (D-Calif.) is throwing out ludicrous ideas like a tax break for the upper-class. Not to mention both the Senate and the House of Representatives are in recess until late April, with no apparent plans to return sooner, despite the crush of both a global pandemic and a spiraling economic cataclysm.
Our lawmakers need to step up, to put it exceedingly mildly.
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