THE FIGURES are staggering, even to those hardened by the experience of the global financial crisis. Disney will furlough 100,000 of its hotel and theme-park workers. Uber may slash its staff by a fifth. Fully 26m new claims for unemployment insurance have been filed in America since late March. By April 18th more than a tenth of participants in the labour force were receiving unemployment benefits, the highest rate on record. In March alone American firms shed more than 700,000 jobs, on net. Another 2m may have gone in April, a drop rivalling the record decline in employment that occurred in 1945, as America's armed forces demobilised. Covid-19 has spread large-scale economic disruption around the world. It is increasingly clear that the pandemic confronts America with a labour-market crisis not seen since the Great Depression of the 1930s. How severe will the crisis be? America's unemployment rate rose to around 10% after the global financial crisis and to 25% during the Depression. Recent forecasts, though beset by uncertainty, put the probable peak rate in 2020 somewhere between those figures. Modelling based on recent filings for benefits suggests that the unemployment rate in mid-April may have been around 16%, according to Ernie Tedeschi of Evercore ISI, a consultancy. An analysis of the macroeconomic effects of the coronavirus published on April 24th by America's Congressional Budget Office (CBO) paints a similar, sobering picture. The CBO reckons that unemployment will rise to 14% in the second quarter of this year, and peak in the third quarter at around 16%. The rate would be even higher, but for the 8m workers it assumes will become discouraged and leave the workforce (in order to count as unemployed, people must participate in the labour market by actively seeking work). Some places and groups will fare worse than others. During the financial crisis, peak unemployment rates across states ranged from just over 4% to nearly 15%. The peak rate for black Americans, at 16.8%, was nearly twice that for whites.
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