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Minneapolis Fed says unemployment numbers could rival Great Depression

The latest report shows 6.6 million Americans filed for unemployment last week, roughly four percent of the entire civilian labor force.

MINNEAPOLIS — In the last two weeks, the U.S. lost more jobs than the entire two-and-a-half years of the Great Recession, according to the U.S. Labor Department’s latest figures.

The latest report shows 6.6 million Americans filed for unemployment last week, roughly four percent of the entire civilian labor force.

The country has never seen anything like it. The closest week in U.S. history saw about 700,000 unemployment claims in one week back in 1982.

What remains unclear is how high the unemployment rate could get.

To date, the worst time of unemployment came in 1933 during the Great Depression, where 24.9 percent of the workforce was out of a job and seeking work.

The unemployment rate stayed above 14 percent through 1940 and didn’t hit ten percent until 1982.

The only other time it reached double digits was for one month in 2009.

The question now: How many people will remain out of work in the months ahead?

The St. Louis FED recently published an estimate putting the possible unemployment rate at 32 percent.

Mark Wright, the director of research at the Federal Reserve Bank of Minneapolis, said their estimates have the unemployment rate climbing 15 to 20 percent, but he said they can’t be certain because many factors could change that.

Neel Kashkari, president of the Minneapolis Fed, oversaw the government bailouts in 2008. He says today’s numbers are staggering, but the recovery will depend on our response.

“After 9/11, the message was ‘get out there. Go to the baseball games. Go to the movie theaters. Don't let the terrorists change our way of life.’ And that was the right response. Now the response is the opposite. The more we take social distancing seriously, at home, at work, with our neighbors, etc., the more we can slow the spread of the crisis, the virus, and the more chance we give to health care first responders to catch up and do their work. So, we all have an important role to play and we will get through this,” said Kashkari.

Wright says, ultimately, everything hinges on controlling the virus. A vaccine, a treatment or widespread testing could all turn these numbers around much quicker than other recessions.

He also warns that unemployment figures could be skewed in the coming months as “unemployment rate” only considers citizens “seeking work”. He says that may not be the case of many people laid off during this pandemic.

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