Page 42 - COVID-19: The Great Reset

The pandemic is confronting the economy with a labour market
crisis of gigantic proportions. The devastation is such and so

sudden as to leave even the most seasoned policy-makers almost
speechless (and worse still, nigh on “policy-less”). In testimony
before the US Senate Committee on Banking on 19 May, the
Federal Reserve System’s chairman – Jerome “Jay” Powell –

confessed: “This precipitous drop in economic activity has caused
a level of pain that is hard to capture in words, as lives are
upended amid great uncertainty about the future.” [31] In just the

two months of March and April 2020, more than 36 million
Americans lost their jobs, reversing 10 years of job gains. In the
US, like elsewhere, temporary dismissals caused by the initial
lockdowns may become permanent, inflicting intense social pain
(that only robust social safety nets can alleviate) and profound

structural damage on countries’ economies.

The level of global unemployment will ultimately depend on the
depth of the collapse in economic activity, but hovering around or
exceeding two-digit levels across the world are a given. In the US,

a harbinger of difficulties to come elsewhere, it is estimated that
the official rate of unemployment could reach a peak of 25% in
2020 – a level equivalent to that of the Great Depression – that
would be even higher if hidden unemployment were to be taken

into account (like workers who are not counted in official statistics
because they are so discourage they abandoned the workforce
and ceased looking for a job, or part-time workers who are looking
for a full-time job). The situation of employees in the service

industry will be particularly dire. That of workers not officially
employed will be even worse.

As for GDP growth, the magnitude and severity of the
unemployment situation are country-dependent. Each nation will
be affected differently, depending on its economic structure and

the nature of its social contract, but the US and Europe offer two
radically different models of how the issue is being addressed by
policy-makers and of what lies ahead.

As of June 2020, the rise in the US unemployment rate (it

stood at a mere 3.5% prior to the pandemic) was much higher

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