In April, the U.S. economy hit an ugly milestone: The unemployment rate climbed to 14.7%, the highest it's been since the Great Depression. And just this past weekend, Kevin Hassett, a senior White House economic advisor, predicted that the jobless rate could climb north of 20% for May and June. Worse yet, it's possible that we'll see double-digit unemployment rates all the way into November. Talk about dire.
Why aren't things getting better?
With a growing number of states easing restrictions and more businesses opening their doors, you'd think we'd be getting a bit more positive news on the unemployment front. But let's remember that some out-of-work Americans have struggled to file unemployment claims, and so the data we saw in April may not fully reflect the actual jobless rate. And also, a lot of businesses received PPP loans in April and May that are helping cover their payroll costs for roughly eight weeks' time. Beyond that, those same businesses may have to lay off staff in the absence of additional small business funding.
How many more jobs will be on the chopping block?
Businesses that have seen a steep decline in revenue during the Great Lockdown may first now be going through the process of unloading payroll costs. Meanwhile, it's conceivable that some companies will seek to lay off staff as a means of self-preservation -- to hoard cash and trim as much fat as possible as we head into a very uncertain second half of 2020.
Could your job be next?
There are certain industries that are feeling COVID-19's impact more so than others. Notably, travel and tourism has been downright hammered. Similarly, the entertainment industry has been struggling, as has the restaurant industry. And while eateries are starting to reopen nationwide, many are being forced to limit capacity, thereby limiting revenue.
If you're worried about losing your job in the coming weeks or months, think about how vulnerable your industry is in light of the ongoing crisis, and also, think about how integral your role is. If you're a seasoned accounting professional with a long list of clients, you may not need to worry to the same degree as a retail store manager or event-planner.
That said, it's not a bad idea to plan for the worst on the unemployment front. That way, if you do wind up out of a job, you'll be better equipped to handle it. For the most part, that means securing your emergency fund by socking away enough cash to pay three to six months' worth of bills. If you rely on your employer for subsidized health insurance, definitely aim for the higher end of that range, as you'll likely need to absorb the cost of health coverage on your own once your paycheck disappears.
It also wouldn't hurt to plan for a situation where you have a job, but doing it isn't feasible. For example, say you're being allowed to work remotely right now, when the country is still mostly shut down. If you're told to report back to an office at some point this year but you don't have child care that allows you to do so, you may have to kiss that paycheck of yours goodbye even if your employer is willing to keep you on staff.
It's too soon to tell when we'll make notable progress on a COVID-19 treatment or vaccine, and until that happens, much of the economy may be at a standstill. If you're still employed right now, prepare for the possibility that your status could change as 2020 drags on -- and take steps to protect yourself financially while you can.