By Isaac Cohen*
Only a term that describes a sudden and profound damage, such as a catastrophe, can describe what happened to the level of employment in the United States during the last eight weeks. More than 33 million persons requested unemployment benefits, in just seven weeks, the highest number ever recorded in such a short period of time. Therefore, the 14.7 percent unemployment figure, revealed last week by the Labor Department covering until April 18, did not reveal the extent of the damage inflicted by the pandemic on the U.S. labor market. High ranking officials, as Treasury Secretary Steven Mnuchin and White House economic adviser Kevin Hassett recognized, on last Sunday talk shows, that by the end of April the unemployment figure was over 20 percent.
Unemployment of 25 percent of the labor force was not seen since the Great Depression of 1929. However, the comparison “is not very helpful,” said in The Wall Street Journal (05/11/20) the former President of the Federal Reserve Ben Bernanke, a recognized expert on the Great Depression. Then, the initial contraction lasted four years, from 1929 to 1933, while this time it happened in weeks. Also, a breakdown of the financial system was a major cause of the Great Depression. Thus far, the financial system remains solid with the support of the central bank, but nobody knows the duration and extent of the contraction, which has already wiped out almost eleven years of economic expansion and job creation.
*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.
