Last week, the U.S. Bureau of Labor Statistics officially confirmed something we already knew: in the months leading up to COVID-19, unemployment in the United States reached Great Recession levels.
But it is not exactly the same situation as what we call a recession. We will not know when this will be true, until we see if the very high unemployment lasts for a long time, that is, for one or more years. Unfortunately, Mr Trump and his allies are doing everything they can to make a severe recession more likely.
Unemployment of 14.7% is quite frightening. However, a note from the relevant department said that technical difficulties may have led to the deterioration of the real unemployment rate by up to almost five percentage points.
If this is true, now the unemployment rate is around 20%, which will be the highest of all except the two worst years of the Great Depression.
The question now is how fast we can recover. If we control the spread of the virus, recovery could indeed be rapid. The truth is that the recovery from the financial crisis of 2008 took a long time.
However, this is related to the problems that had accumulated during the “real estate bubble” period, mainly to the unprecedented levels of household debt. The problems now are not comparable to them. However, controlling the virus does not mean “leveling the curve”, which we accidentally managed to do – we managed to slow down the spread of COVID-19 enough so that our hospitals are not complete. It means “breaking the curve”: reducing the number of cases and at the same time conducting large-scale diagnostic tests to identify new cases. At the same time, keep track of contacts so that those who have already been exposed to the virus are quarantined. Folding the curve is not easy, but it is very likely. In fact, many other countries, from South Korea to New Zealand, believe it or not, have already done so.
For a while, it seemed that the Trump administration was finally willing to take COVID-19 seriously. In mid-March, it introduced guidelines for social distancing but did not impose federal regulations.
But lately, all we’ve heard from the White House is the need to open up the economy, even though we haven’t gotten close enough to do so without risking a second wave of infections.