Those who remember the Great Recession, which began in 2007 and lasted well into 2009, can no doubt attest to the fact that it was one extended period of financial uncertainty. But while job loss was rampant during that two-year stretch, the numbers from back then pale in comparison to the job loss Americans have already experienced during the COVID-19 pandemic.
During the Great Recession, the number of unemployed Americans increased by 8.8 million from late 2007 through the beginning of 2010. And in January of 2010, the U.S. unemployment rate peaked at 10.6%.
The number of out-of-work Americans during the COVID-19 crisis is already much higher. Prior to the pandemic, an estimated 6.2 million people were out of a job. By May, that number shot up to 20.5 million.
In April, the jobless rate reached 14.7%-it's highest on record since the Great Depression. And while May's jobless rate came in lower at 13.3%, a deeper dive reveals that out-of-work Americans may have been underrepresented, bringing the actual unemployment rate up to more like 16.3%.
How did we get here?
Before the COVID-19 pandemic hit U.S. soil in full force, the unemployment rate was sitting fairly pretty at 3.5%. So how did it jump so drastically compared to the Great Recession?
It's simple: It wasn't a matter of economics, it was a matter of public health. When COVID-19 cases started multiplying rapidly, state governments reacted with widespread closures and stay-at-home orders. As such, countless small businesses were forced to shut down, leaving millions of workers without an income as a result. Larger employers, meanwhile, faced restrictions of their own, and while many white-collar workers were able to shift to remote employment, that also didn't work across the board. The result? A seemingly overnight jump in unemployment despite a strong economy leading up to the pandemic.
Of course, this begs the question: Now that the country is opening back up, will the jobless rate fall as rapidly as it climbed?
Without a crystal ball, it's impossible to predict that, but the logical answer is "probably not." While we may see unemployment levels drop as more and more states ease restrictions and businesses open back up, we can't gloss over the fact many Americans are a) hurting financially and don't have the money to pump back into the economy, and b) spending more cautiously due to general economic uncertainty.
We also can't discount the possibility of a second wave of COVID-19 infections spurring a repeat lockdown and thwarting economic recovery on a whole. Health experts have gone so far as to say that a follow-up wave is inevitable, and many states are currently seeing their numbers climb with fewer restrictions in place. That's bad news not only from a public health perspective, but also, an economic one.
What happens once a COVID-19 vaccine comes out?
It stands to reason that once a vaccine is made widely available, there won't be a need to enact massive shutdowns, which means jobs will eventually be reintroduced and Americans will feel more comfortable resuming their normal lives and getting back to their former spending habits. But will that recovery occur overnight? Probably not.
Many out-of-work Americans have already been forced into a deep financial hole, and they'll need time to get back to their pre-pandemic financial state. And the COVID-19 crisis might change the way certain businesses operate on a long-term basis, and it's unclear what impact that might have. As such, while we can hope for a fairly quick recovery once there's a medical means of combatting COVID-19, we should also brace for the possibility that the jobless rate might stay high for a while, and that the recession we're currently in may extend beyond the date a vaccine is initially deployed.