Coronavirus

US Economy Could Lose 5M Jobs In COVID-19 Fallout

The newest estimate as to the total number of jobs that will be lost because of the coronavirus sits at around 5 million, according to The Wall Street Journal.

According to numbers predicted by experts, the economic shortfall could hit up to $1.5 trillion across the U.S., and a recession is almost certainly going to happen.

The downturn, according to experts, could last months. The debilitating effects could rival and maybe even surpass the effects of the 2007-09 housing crisis that caused a recession a little over a decade ago, the experts predicted.

Bruce Kasman, an economist with JPMorgan, said the shock would be substantial, and the consequences of economic activity would be felt for months, with the trade-offs “not really clear” to policy makers.

Kasman offered a number of detailed predictions, such as that U.S. gross domestic product (GDP) will likely fall by 1.8 percent, a worse decline than his previous prediction of 1.5 percent before the pandemic hit. It would mean around $700 billion in lost funds, and a rise in debt and the devastation of capital. Kasman said he thinks around 7 million to 8 million jobs will be lost this spring, although some may come back later in the year if things bounce back as he expects.

Loyola Marymount University Economist Sung Won Sohn said the virus could cause a loss of about $592 billion in revenue as well as 5.2 million jobs this year — a drastic spike compared to the prediction prior to the pandemic. Goldman Sachs said the U.S. output could fall by 3.1 percent this year, and unemployment could hit 9 percent, up from the current 3.5 percent.

During the financial crisis of the late 2000s, by comparison, the GDP fell by around 8.8 percent and job losses sat at 800,000 for months at a time, with a total of 8 million jobs lost overall. The unemployment rate was around 4.4 percent when the crisis began and, at the recession’s highest point, hit 10 percent.

This time, the job losses will likely be highly concentrated in areas like the airline industry, restaurants, hotels and real estate.

Goldman Sachs said this week’s unemployment filings will likely be at an all-time high, with a potential 2.25 million people set to file by the end of the week.

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LIVE PYMNTS ROUNDTABLE: MODERNIZING & SCALING FOR THE NEW NORMAL

The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

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