The U.S. economy will lose some $7 trillion and unemployment will skyrocket to 14.6% within 90 days as a result of extreme social distancing policies meant to mitigate the coronavirus pandemic, according to a new Ball State University report.
The co-authors of the study, "What Will the Next Three Months Look Like? Simulating the Impact of Social Distancing on GDP and Employment," by Ball State's Center for Business and Economic Research, said the situation could become even worse.
"These are likely very conservative estimates, yet it argues that job losses in March, April, May, and June may be the four largest in U.S. history, topping the 1.9 million jobs lost in the weeks following V-J Day in September 1945," said study co-author Michael Hicks.
"This level of job losses does not consider the effect of school closures on labor supply by households," Hicks continued. "This study does not assess the impact of supply chain disruptions on manufacturing, nor does it include the extreme shock to household wealth caused by stock market declines."
He added that the study does not consider the broader impact beyond three months, emphasizing that "policies which speed resources to displaced workers are needed," such as "workshare, and relief from job search, job tenure, and earnings requirements" and should be available for both small businesses and households.
Hicks also pushed for policies that encourage extensions to borrowing terms and said "Universal Basic Income payments, with a fixed duration, would provide economic stabilization, while minimizing labor market supply effects."
He said most schools "are unprepared for lengthy closure. Efforts to expand broadband connectivity and fund technological options for schools should be part of a broader stimulus bill."
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