The U.S.
unemployment rate may skyrocket to 32.1% in the second quarter of 2020,
according to the Federal Reserve Bank of St. Louis
Previously, the highest rate of unemployment in U.S. history was 24.9%, which occurred in 1933 during the Great Depression
During the
Great Depression, both money and food were in short supply, breadlines
were long and soup kitchens became mainstream; during World War II, the
Emergency Price Control Act was put in place, allowing the government to
set price limits and ration food and other commodities
Oxfam, a
conglomerate of 19 organizations working to end global poverty,
estimated that the COVID-19 crisis could send half a billion more people
into poverty
Unemployment
and financial insecurity puts mental health at risk; during the Great
Recession, at least 10,000 additional “economic suicides” occurred
between 2008 and 2010
Consider
planting a vegetable garden and be sure to tend to your mental health,
especially if you’re one of the millions being affected by job losses,
unemployment and social distancing
The U.S. unemployment rate may
skyrocket to 32.1% in the second quarter of 2020, according to the
Federal Reserve Bank of St. Louis.1 Previously, the highest rate of unemployment in U.S. history was 24.9%, which occurred in 1933 during the Great Depression.2
The figure comes from "back-of-the-envelope" estimates, in which the
St. Louis Fed attempted to quantify the financial fallout from social
distancing measures imposed during the COVID-19 pandemic.
With the economy crippled, and layoffs ensuing, an unprecedented
number of Americans have had their livelihoods suspended, which could
cause poverty rates to climb while triggering a subsequent mental
health crisis.
What is even more shocking is how great the stock market is doing as
it has rallied for the fourth successive week in a row, despite record
numbers losing their jobs. It makes you think that if everyone loses
their job the stock market might double.
This is an egregious example of fatally flawed federal and
government policies that will inevitably blow up in their faces. Yes,
we are having a stock market rally for now, but nearly every insightful
economist I review is predicting a crash far bigger than the Great
Depression because of the harm their actions are causing on top of an
already inflated bubble.
Fed Predicts 52.8 Million Americans Could Be Unemployed
As a starting point to reach this staggering statistic, the St.
Louis Fed used data from the Bureau of Labor Statistics (BLS), which
noted an unemployment rate of 3.5% in February 2020, amounting to about
5.76 million unemployed Americans.
They then used BLS data cited by St. Louis Fed regional economist Charles Gascon,3
who classified 808 occupations to estimate how many employees are at
high risk of layoff due to social distancing, using criteria such as
whether the occupations involve work that can be completed off-site and
are considered essential to public health and safety.
Occupations in sales, production, food preparation and services and
others were deemed to be at high risk of layoff, potentially affecting
66.8 million people.
Other St. Louis Fed economists — Fernando Leibovici and Ana Maria
Santacreu — and research associate Matthew Famiglietti suggested
"nonessential occupations that require a high degree of face-to-face
and close physical interaction are particularly likely to be hit hard,
as consumers reduce their demand for them in pursuit of social
distancing."4
These occupations include barbers, hairstylists, food and beverage
serving workers, flight attendants and others, amounting to another
27.3 million workers who may be out of work. To calculate the second
quarter 2020 unemployment rate, the economists took the average of
these two estimates, which resulted in 47.05 Americans being laid off.
They further noted:5
"Summing to the initial number of unemployed in February, this
resulted in a total number of unemployed persons of 52.81 million.
Given the assumption of a constant labor force, this resulted in an
unemployment rate of 32.1%."
Given that this is a rough estimate, St. Louis Fed economist Miguel
Faria-e-Castro suggested that actual second-quarter unemployment rates
could be anywhere between 10.5% and 40.6%. For comparison, during the
Great Recession, unemployment peaked at 10% in October 2009.6
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Unemployment Could Skyrocket From 3.5% to 32%
If you follow the numbers, the unemployment rate went from 3.5% in
February 2020 to 4.4% in March — and is predicted to rise to over 32%
when the April data are in, which won't be until the first week of May.
The small rise in unemployment cases in March isn't a useful
indicator, since it includes data from early in the month, before the
bulk of the layoffs took place.
"April, however, will be the cruelest month," Vox reported,
"capturing the bulk of the layoffs and furloughs undertaken due to
coronavirus," and adding, "you should not be shocked if the April
number is in the double digits, at the very least. This is not
inevitable, but it is quite plausible. These are truly unprecedented
times. Expect unprecedented numbers."7
In fact, a real-time labor market estimate found the U.S.
unemployment rate had already increased to 20.2% as of April 15, 2020.8
Meanwhile, unemployment claims surpassed the 22-million mark in the
last month, which, as noted by ZeroHedge, "is over 10 times the prior
worst four-week period in the last 50-plus years." Further, in the
last four weeks, "more Americans have filed for unemployment than jobs
gained during the last decade since the end of the Great Recession."9
Will This Bring a Return to Depression-Era Food Rations?
What's now being termed "The Great Lockdown" may turn out to be
worse than the Great Depression. The International Monetary Fund
predicted the global economy would contract by 3% in 2020 as economies
shut down.10
And Carmen Reinhart, a professor of economics and finance at
Harvard's Kennedy School of Government, told The Associated Press, "We
will see higher default rates and business failures. It could be like
the 1930s."11
During the Great Depression, both money and food were in short
supply, breadlines were long and soup kitchens became mainstream. The
average U.S. family lived by the motto "Use it up, wear it out, make do
or do without."12
Women stretched their food budgets by creating casseroles and
churches organized potlucks to share food, while community "thrift
gardens" were created for residents to grow their own food.
During World War II, the Emergency Price Control Act was put in
place, allowing the government to set price limits and ration food and
other commodities, like tires, gasoline and oil, so scarce resources
could be evenly distributed and hoarding would be limited. According to
History.com:13
"By the spring [1942], Americans were unable to purchase sugar
without government-issued food coupons. Vouchers for coffee were
introduced in November, and by March of 1943, meat, cheese, fats,
canned fish, canned milk and other processed foods were added to the
list of rationed provisions."
Americans were given ration books that contained stamps, and the
government set a point system to foods based on availability.
History.com continued:14
“[C]ustomers were allowed to use 48 ‘blue points’ to buy canned,
bottled or dried foods, and 64 ‘red points’ to buy meat, fish and dairy
each month — that is, if the items were in stock at the market.
Due to changes in the supply and demand of various goods, the
OPA [Office of Price Administration] periodically adjusted point
values, which often further complicated an already complex system that
required home cooks to plan well in advance to prepare meals.”
During this time, many Americans also planted "victory gardens" to
supply their own fruits and vegetables. Returning to an era of food
rations and scarcity may have seemed unthinkable to most Americans in
early March 2020 — but is far more believable today. Already, people are
waiting in long lines to get into stores, where they're allowed to
purchase only certain allotments of high-demand items like eggs and toilet paper.
The process gets more orderly by the day, with Americans now being
instructed to stand at set 6-foot intervals and the purchase of certain
items deemed "nonessential" being restricted entirely. If you've ever
thought about growing your own food, but perhaps haven't felt motivated
to actually do it, now is a perfect time to get started growing your own vegetable garden.
Half a Billion in Poverty, Entire Industries Destroyed
In a dire warning issued by Oxfam, a conglomerate of 19
organizations working to end global poverty, it's estimated that the
COVID-19 crisis could send half a billion more people into poverty.15
The analysis suggests that 6% to 8% of the global population may be
forced into poverty by the economic shutdowns being imposed to stop the
spread of COVID-19.
In some regions, such as sub-Saharan Africa, the Middle East and
North Africa, the fight against poverty could be set back by three
decades, and the hardest hit will be "poor people in poor countries who
are already struggling to survive" and have no safety nets to bail
them out. Oxfam reported:16
"The poorest workers in rich and poor nations are less likely to
be in formal employment, enjoy labour protections such as sick pay, or
be able to work from home. Globally, just one out of every five
unemployed people have access to unemployment benefits.
Two billion people work in the informal sector with no access to
sick pay — the majority in poor countries where 90 percent of jobs are
informal compared to just 18 percent in rich nations."
In Bangladesh, for instance, more than 1 million garment workers,
most of whom are women, have been laid off without pay because of
cancellations of orders from Western clothing brands.
In Africa, meanwhile, it's estimated that close to half of jobs
could disappear. One taxi driver and father told Oxfam he had not
received a fare since the lockdown closed the airport and restaurants,
stating "this virus will starve us before it makes us sick."17
Entire industries have also been destroyed. Dairy farmers are being
forced to dump milk as demand from restaurants and schools plummets.
The dairy industry could lose $5 billion to $10 billion in sales in the
next six months, and the seafood industry is also reeling, facing an
85% drop in revenue.18 Declines in consumer spending is also forcing down prices for other farm products, putting farmers at risk.
Tim Gibbons, communications director at the Missouri Rural Crisis
Center, told the Columbia Daily Tribune, "It can't be highlighted enough
that it was really bad out here [for farmers] before COVID-19, and
COVID has only made it worse. It's shining a spotlight on the rigidity
and lack of resilience for the corporate model of [farm production],
which does not pay farmers fairly and is not good for consumers."19
How Many Will Die From the Mental Health Fallout?
The U.S. was already on the brink of a mental health crisis prior to
the COVID-19 pandemic. But the associated stresses, which run the
gamut from isolation and anxiety to unemployment and illness, are now
threatening to create a mental health emergency among Americans.
Such was the case during the Great Depression, when suicide rates reached an all-time high,20 and again during the Great Recession, when at least 10,000 additional "economic suicides" occurred between 2008 and 2010.21
"Job loss, debt and foreclosure increase risks of suicidal thinking," researchers wrote in The British Journal of Psychiatry.22
Another study looking at the association between suicide and
unemployment in 63 countries between 2000 and 2011, which notably
included the 2008 global economic recession, found the relative risk of
suicide associated with unemployment was elevated by 20% to 30% during
the study period.
Further, 1 in 5 of an estimated 233,000 annual suicides that took place from 2000 to 2011 were linked to unemployment.23
A 2014 Gallup Poll also found, "The longer that Americans are
unemployed, the more likely they are to report signs of poor
psychological well-being."24
Depression is another considerable risk. The poll found that about 1
in 5 Americans who were unemployed for a year or more either had or
were being treated for depression, which is double the rate of those
who were unemployed for five weeks or less. According to Gallup:25
"Gallup finds that unemployed Americans are more than twice as
likely as those with full-time jobs to say they currently have or are
being treated for depression — 12.4% vs. 5.6%, respectively. However,
the depression rate among the long-term unemployed — which the Bureau
of Labor Statistics defines as those who have been seeking work for 27
weeks or more — jumps to 18.0%."
Social isolation and quarantine also take a toll on mental health. A
rapid review of the evidence, published in The Lancet in March 2020,
looked into the psychological impact of quarantine, finding, not
surprisingly, "Most reviewed studies reported negative psychological
effects including post-traumatic stress symptoms, confusion, and
anger."26
Out of 2,760 quarantined people, 34% experienced high levels of
psychological distress, which could include anxiety or depression.
Long-lasting psychological effects are also possible.27
Take Steps to Protect Your Mental Health
Many are talking about hand washing, wearing masks
and other steps to protect your physical health during the COVID-19
pandemic. Equally important is tending to your mental health,
especially if you're one of the millions being affected by job losses,
unemployment and social distancing.
In the video above, Julie Schiffman demonstrates how to use the Emotional Freedom Techniques
(EFT) to relieve anxiety and other challenging emotions brought on by
news and uncertainty about this pandemic and/or self-quarantining.
Another option is the Neuro-Emotional Technique's First Aid Stress
Tool, or NET FAST,28 which is performed as follows:
While thinking about an issue that is bothering you, place your
right wrist, palm up, into your left hand. Place three fingers of
your left hand onto the area of your right wrist where you can
feel your pulse.
Place your open right hand on your forehead. Gently breathe in and
out several times while concentrating on feeling the issue that bothers
you.
Switch hands and repeat steps 1 and 2.
As mentioned, now is also an excellent time to dive into organic
gardening. Not only can it give you increased food security, but
gardening also helps to reduce stress and save money on groceries, both of which will become increasingly important if unemployment levels continue to rise.
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