Chart of the day

Posted: 5 May 2020 in Uncategorized
Tags: , , , , , ,


The Congressional Budget Office has issued preliminary projections of key economic variables through the end of calendar year 2021.

As readers can see in the chart above, they expect the U.S. economy to experience a sharp contraction in the second quarter of 2020 (of almost 40 percent, on an annual basis!) but then a rebound in the third and fourth quarters of 2020, continuing into the next year.

They may be right, although I do think their numbers may be too optimistic. However, even under such a rosy forecast, the unemployment numbers are staggering: 14 percent for the second quarter, 16 percent in the third quarter, and 10.1 percent for 2021.

Now, as regular readers know, my own calculations indicate a current unemployment rate of more than 20 percent. And I expect that to grow when the new number of initial claims is reported later this week.

Still, even according to the rates forecast by the CBO, this is an economic and social disaster. Let’s remember that the highest monthly rate experienced during the Second Great Depression was 10 percent—and the CBO expects a higher rate through the remainder of 2020 and all of 2021.

In other words, we can expect many of those workers who have been laid off or lost their jobs due to the response to the coronavirus outbreak will not be going back to work this year or next.

It’s also important to know that the CBO report projects official unemployment not the total number of workers who have experienced partial job loss including hours or salary reduction.


The latest Kaiser Family Foundation Health Tracking Poll finds 55 percent of those who were employed either full-time or part-time on 1 February 2020 report that they have either lost their job, been furloughed, or had their salary or hours reduced. This includes two-thirds of those in households earning less than $40,000 annually (65 percent) or between $40,000 and $75,000 (66 percent).

However, contrary to the CBO projections, the vast majority of these individuals (83 percent) believe they will get their previous hours, income, or job back within six months.

My own view, for what it’s worth, is that the economic and social effects of pandemic-related job losses on workers, their families, and their communities are going to be more widespread and last much longer than workers currently expect.

What this means is that, as the authors of the Kaiser report write,

these former workers may be entering the voting booths (or voting by mail which is more likely) with their expectations about a return to normal work-life being largely unmet.

The question then is, what or whom are they going to eventually hold responsible for their plight?

  1. intraverse1 says:

    With around 30 million current, cumulative unemployment claims, and a U.S. labor force of about 165 million, the current unemployment rate would be 18.2%. A standard definition of an economic depression is 15% unemployment, and the U.S. 1930s Great Depression peaked at 25%.

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