One Of The Worst Economic Stats I’ve Ever Seen
“The longer those health risks persist, the Fed chief said, the more likely businesses will fail and households will be strapped for income in a downturn that he noted has fallen most heavily on those least able to cope. A recent Fed survey, he said, estimated that 40% of households with less than $40,000 in income included someone who has lost a job since February.”
This is from US Federal Reserve Chairman Jerome Powell talking last week.
The stat is horrible…
- Because it’s horrible by itself – for these people, their families, the community, and the US overall.
- Because it also puts things into context.
Most economic stats are something like the US GDP fell by 4.8% in the 1st quarter of 2020.
Without the context that doesn’t mean much to most people.
The stat and quote above does both which is why it’s so powerful.
What it also does is put into context that the US economically is already at levels we haven’t seen since the Great Depression in terms of unemployment.
As of this writing an estimated 45 million Americans are out of work.
This is 13.7% of the entire US population of an estimated 328 million people.
And 20.9% of the working age population.
Working age population is between the ages of 15 to 64 and this group makes up 65.4% of the total US population.
This 20.9% number is my current estimate of the real unemployment rate in the US.
What is the rate according to official government data?
On May 8th, 2020, the US government released its “official” unemployment data and put the estimate at 14.7%. The highest level since the Great Depression.
In that same article members of the Fed put the “unofficial” rate closer to 23%. Near the all-time high of 24.9% we saw during the Great Depression.
I put official in quotes above because that number doesn’t include people who have stopped working and people who are still getting paid but not working.
So, I don’t view that as the real numbers.
The economy is already at its worst levels since the Great Depression…
And in the short term it’s going to get worse.
More businesses nationwide are going to close, and this is going to lead to more unemployment
These things are going to happen if we don’t “get back to normal” soon.
Because most businesses can’t survive longer than 3 months without getting paid.
This is from your mom and pop shops in your neighborhood all the way up to huge worldwide companies.
I’ll illustrate this in tomorrow’s article where I’ll tell you about Hertz filing for bankruptcy.
I don’t know what the answer to opening the economy back up and getting “back to normal.”
But the federal government and state governments must work together to figure something out soon or we’re going to face economic devastation we’ve never seen in this country.
Sadly, we’re already most of the way there.