Unemployment to Top 10% in 45 Days

Summary: Extreme social distancing in the United States will create a recession as mass layoffs cause unemployment to exceed 10.5% nationally 45 days. Within 90 days, unemployment may rise to 14.6% nationally.Main head: Study: Unemployment to top 10% in coming weeks

MUNCIE, Indiana – Extreme social distancing in the United States will create a recession as mass layoffs cause unemployment to exceed 10.5% nationally within 45 days, says a new report from Ball State University.

Within 90 days, the economic downturn caused by governmental efforts to mitigate COVID-19 will cause unemployment to rise to 14.6% nationally.

The co-authors of “What Will the Next Three Months Look Like? Simulating the Impact of Social Distancing on GDP and Employment” by Ball State’s Center for Business and Economic Research (CBER) says the picture could be worse.

“These are likely very conservative estimates, yet it argues that job losses in March, April, May, and June may be the four largest in U.S. history, topping the 1.9 million jobs lost in the weeks following V-J Day in September 1945,” said CBER director Michael Hicks. “This level of job losses does not consider the effect of school closures on labor supply by households. This study does not assess the impact of supply chain disruptions on manufacturing, nor does it include the extreme shock to household wealth caused by stock market declines.”

CBER’s analysis finds the effect of a 45-day social distancing will reduce GDP significantly—down .5 nationally and and cause job losses 10.6 million nationally. After 90 days of social distancing, researchers anticipate and 21 million unemployed nationally. GDP will fall .9 nationally.




“Moreover, this estimate extends only 90 days and does not include much broader impacts of longer social distancing,” he said. “We urgently need state policies to speed resources to displaced workers, and we need policies such as workshare and relief from job search, job tenure, and earnings requirements.”

Hicks also pointed out that state and federal policies that encourage extensions to borrowing terms should be broadly encouraged.

“This should extend to both small businesses and households,” he said. “Federal policies that supplement income for all residents are required. Universal basic income payments, with a fixed duration, would provide economic stabilization while minimizing labor market supply effects.

“Beyond stabilization efforts, state and federal governments should prepare for longer duration impacts. Schools across much of the nation are unprepared for lengthy closures. Efforts to expand broadband connectivity and fund technological options for schools should be part of a broader stimulus bill.”.

About Ball State

Founded in 1918 and located in Muncie, Ball State University is one of Indiana’s premier universities and an economic driver for the state. Ball State’s 22,500 students come from all over Indiana, the nation, and the world. The 790-acre campus is large enough to accommodate first-rate facilities and 19 NCAA Division I sports, but our welcoming and inclusive campus is small enough to ensure the friendliness, personal attention, and access that are the hallmarks of the University. Destination 2040: Our Flight Path establishes Ball State’s ambitious goals for our second century. We Fly!



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