As COVID-19 reshapes our economy, our newsletter will help you unpack the news from the day.
More and more people are being laid off. How far might unemployment go?
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We’re starting to hear about people getting laid off from jobs at movie theaters, restaurants, bars, stores and other businesses as people stay home because of the threat of COVID-19.
We’ll get a glimpse of where things may be headed Thursday when the weekly unemployment claims data is next reported.
Up until three days ago, Dennis Mendoza worked in sales at a small family-owned store in Florida, Tampa Bay Ponds and Rocks. Business was good until people stopped coming because of COVID-19.
“Business had gotten so slow and I was the last one hired, so the first one let go,” Mendoza said.
He just filed for unemployment but doesn’t currently get any government assistance and he and his fiancée don’t have a financial cushion.
“I mean, I have, like, $100 in my bank account, and that’s about it,” Mendoza said. “I’ve been trying to apply for new jobs, but nobody’s hiring right now with everything going on.”
We don’t know exactly how high unemployment might go in this situation. During the Great Recession, it hit 10%.
Erica Groshen, a labor economist at Cornell, explained what that means: “At 10% unemployment, everybody knows somebody who has lost a job or who has finished school recently and is not able to find a job,” Groshen said.
At that level of unemployment, it takes longer for the economy to bounce back.
“Because there are going to be people out of work, they’re going to have depressed incomes and they’re going to be much more frugal with whatever spending they’re able to do,” said Seth Carpenter, chief U.S. economist at UBS.
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