New data released Thursday suggests close to one in five Minnesota workers is unemployed or lost work in the past six weeks, a clear sign that the economic crisis brought on by the coronavirus, one that has struck with stunning speed, is the worst since the Great Depression.
The national picture is similarly grim, with another 5.2 million Americans filing for unemployment this week, bringing the total over the past four weeks to more than 22 million.
"Every piece of evidence that's coming in says that in terms of magnitude, this is comparable right now to the Great Depression from 1929 to 1933," said V.V. Chari, an economist at the University of Minnesota.
But in contrast to that era, the damage now is unfolding over a handful of months rather than years.
"This is unprecedented in American economic history. It's horrific," Chari said. "It's causing widespread, extensive economic damage."
U.S. public life remains shut down, and the testing needed to build public confidence and hasten a return to a more normal way of life is weeks away in Minnesota and most of the country.
Employment, income, housing starts, manufacturing indices and retail sales have all shown sharp contractions. GDP, which is driven by consumer spending, will as well.
"Even if people get their jobs back, it's going to take a while for consumer spending to go up," said Charlie Weaver, executive director of the Minnesota Business Partnership. "You don't have the disposable incomes available to people that they used to have, to buy a [nicer] bed or a four-wheeler or discretionary things that they would be buying."
The state Department of Employment and Economic Development released job figures for March on Thursday, based on surveys conducted before Minnesotans started practicing social distancing and closing nonessential businesses.
As a result, the Minnesota unemployment rate for March will go in the books as 3.1%, unchanged from February.
The data showed 118,543 people meeting the criteria for unemployment: They were looking for a job but didn't have one.
Already, the data is woefully out of date, and the official figures won't show the chaos of recent weeks until the next report on May 21.
As well, the strict definition of unemployment, which is standard for U.S. labor statistics, is also misleading: Though 46,000 fewer Minnesotans were working in March than in February, the state counted only 8,000 as newly unemployed.
And this was all before Minnesotans were ordered to stay home at the end of March.
Since March 16, more than 482,000 Minnesotans have filed for unemployment, and though the government doesn't necessarily view those workers as unemployed, that number is likely an undercount because not everyone who lost work has filed a jobless claim.
The lag in economic data and the gap between the numbers and reality — the April U.S. jobs report captured only a sliver of the damage done in March — has frustrated economists and confused the public.
An economist at Arizona State University, Alexander Bick, published a preliminary paper on Wednesday attempting to create real-time labor market statistics, arguing that the three-week lag that serves policymakers well in normal times is not suited for the current crisis.
Bick and his research partner Adam Blandin estimate the economy has lost 24 million jobs since the Department of Labor last collected data and that the U.S. unemployment rate is 20.2%, up from the 4.5% announced the first week of April.
They calculate that hours worked declined by 25% over the past month, with half of the decline coming from layoffs and the other half coming from reductions in hours.
"Declines were most pronounced for workers who were female, older and less educated," Bick and Blandin wrote.
The uncertainty of the virus — over how many people will die, how long immunity may last, and the potential severity of second or third waves of the outbreak — is devilish for businesses, workers and the economy.
"Even if we determine that the coronavirus is not a serious threat, we will see a prolonged period of weakness in the economy as we figure out how to live in a new normal," the U's Chari said.
"If the virus turns out to be much more resistant to any policy measures, then you're going to see extended periods of shelter-in-place.
"On top of all that, there are serious concerns about a second or third wave. So I don't know. It looks pretty grim."
And the worst of the economic pain will be felt by the young, Chari said, those entering the job market or those who will enter the job market in the next year or two. The effect on their income will be lifelong.
"The longer this continues, the longer you are condemning a whole generation of bright-eyed 18-year-olds, the future of this country, to starting off and then quite possibly for quite a long time, being substantially poorer," Chari said. "Especially disadvantaged kids."
Adam Belz • 612-673-4405
Twitter: @adambelz
