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Home / Jared Bernstein: On the economy / At some point, a lot of economically vulnerable people will need to get back to work.

At some point, a lot of economically vulnerable people will need to get back to work.

Summary:
Yesterday, we learn the economy contracted in the last quarter at the fastest rate since 2008, when we were in what used to be called the Great Recession. As this decline captured only a tiny share of the time we’ve been in shutdown, it’s the tip of the iceberg that’s sitting atop an economy still in deep freeze. This morning, we learned that another 3.8 million people filed claims for Unemployment Insurance. That’s 30 million claims, which are a fair proxy for layoffs, in six weeks. In a month-and-a-half, we’ve experienced more than three times the layoffs we had in the whole of the recession formerly known as “great.” The unemployment rate implied by these numbers is 18 percent, much higher than any previous peak. Such numbers complement the info from a new NPR/PBS NewsHour/Marist poll

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Yesterday, we learn the economy contracted in the last quarter at the fastest rate since 2008, when we were in what used to be called the Great Recession. As this decline captured only a tiny share of the time we’ve been in shutdown, it’s the tip of the iceberg that’s sitting atop an economy still in deep freeze. This morning, we learned that another 3.8 million people filed claims for Unemployment Insurance. That’s 30 million claims, which are a fair proxy for layoffs, in six weeks. In a month-and-a-half, we’ve experienced more than three times the layoffs we had in the whole of the recession formerly known as “great.”

The unemployment rate implied by these numbers is 18 percent, much higher than any previous peak.

Such numbers complement the info from a new NPR/PBS NewsHour/Marist poll that gives one a sense of pervasive hardship. As expected, the poll reveals a familiar partisan divide on Trump’s handling of the virus and the economy, but when asked about layoffs or reduced hours at work, about half of the respondents of all political stripes said they or someone they know has been hit by the shutdown. That’s up sharply from 18 percent in April. Lower-income persons, non-whites, and non-college graduates have been hit hardest, but the pain is widespread.

The poll also shows that despite the economic hardship, large majorities do not want to open up the economy too soon. Still, there’s a contrast that caught my eye. Over 90 percent said they thought it was too soon for large groups to attend sporting events, but a significantly lower 65 percent said it was too soon to get back to work.

Given that GDP is falling much faster in this quarter than last, that the jobless rate is probably heading for 20 percent, and that the bottom half of households in America have virtually no savings to fall back on, I suspect that this totally understandable reticence to mess with an invisible, potentially fatal virus could quickly flip. This is especially likely as some governors and White House officials decide that it’s safe to go back in the water, even while epidemiologists are shouting “not so fast!”

This impulse to get back to something resembling normality is also completely understandable. Neither the broad economy nor the people who comprise it–at least, those not deemed “essential”–are designed to freeze in place. Moreover, all the deep racial and economic imbalances that predated the crisis are playing out in ways that are as predictable as they are fatal, especially to African Americans. I know that many of those “liberate Michigan” protesters are motivated by shady, political forces. But there are many others who don’t just want to go back to work. Their livelihoods and that of their families depend on it.

For now, some of the fiscal measures we’ve taken, including expanded UI compensation and checks to households are helping. But the UI expansion runs out at the end of July, and as partisan politics appears to be reawakening from its very brief slumber, it’s no slam dunk that it either checks or plussed-up-UI benefits will get repeated (though they definitely should).

If I’m right that the share of respondents saying it’s too soon to get back to work falls precipitously with each new UI claims report, what must happen to accommodate their shifting views?

That’s easy: what’s now invisible must be made visible through testing at least one million persons per day as opposed to the ~200,000 or so we’re currently testing.

And that requires the Trump White House to stop talking about drinking breach, preening about their great work, and kicking everything important to the states. Simply put, they need to for once get ahead of this thing by taking charge on widespread testing and tracing. And they need to do so before majorities of people decide they can’t afford to shelter in place much longer.

Jared Bernstein
Jared Bernstein joined the Center on Budget and Policy Priorities in May 2011 as a Senior Fellow. From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden, Executive Director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team. Prior to joining the Obama administration, Bernstein was a senior economist and the director of the Living Standards Program at the Economic Policy Institute, and between 1995 and 1996, he held the post of Deputy Chief Economist at the U.S. Department of Labor.

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