Courtesy of Peak Prosperity
By Chris Carey
“Coronacation,” as some are now calling it, has brought along financial worries for millions of Americans. In the next few months, the United States is expected to see higher rates of unemployment than seen during the height of the Great Depression, and as many spend the time at home, helplessness and one lingering question remain: will I have a job when this all ends?
This past week, Fortune reports that an additional 4.4 million Americans filed for unemployment during the week of April 18, bringing the current rate up to nearly 21%. At year-end during 1932, the height of the Great Depression, United States unemployment was at a staggering 23%. This brings Americans to wonder two primary thoughts.
First, does the stock market’s current strength bode well for the unspeakable 33 million Americans out of work? Second, will it take as long for unemployment to return to steady rates as it did during the 1930s?
As for the first question, the short answer is yes. Amid stimulus packages and a stagnant economy, The New York Times reports April as the best month for the stock market since 1987. How can stock performance be so incredible with everyone out of work?
Economists and pundits alike wonder if the continued positive rhetoric of the Trump administration, coupled with the seemingly temporary nature of a COVID-based shutdown could be stimulating positivity in the market. If this is the case, then a strong market and a readiness to get back to work could result in a quicker return of jobs than the pessimists imagine.
On the other side of the same coin, the strength of the market may slowly give way if the pandemic continues well into the summer and fall months. Furthermore, as more small businesses close, some forever, there simply will not be as great of a demand for jobs. It can be reasonably assumed that at its best, unemployment will be significantly higher than the 3.5% it was before the crisis occurred.
As far as the second point, so much is up in the air regarding a vaccine for the disease, the longevity of the disease, and the fates of businesses, that it is very hard to tell if the economic revitalization will happen across weeks, months, or even years.
Hopefuls such as the president and his advisors anticipate a speedy recovery. With the strength of the market, the hopefulness of many individuals, and the unprecedented nature of the economic closing, it could be possible; however, perhaps the scarier alternative is the truer one in this case.
Simply put, the economy has suffered a fatal blow. How it gets back up and running is a question that only time can answer. As for now, stay home, stay safe, and worry about finals, not that summer work!