Art Woolf is a columnist for VTDigger. He recently retired as an associate professor of economics at the University of Vermont.
Vermont’s March unemployment rate rose to 3.2% from the historic lows it has experienced for the last year and a half. In February, unemployment was 2.4% and it had been below 3.0% since the summer of 2017.
The number of jobs at Vermont employers fell by nearly 3,000 from February, and by 7,700 from last March, the biggest percentage decline since the Great Recession in 2009.
It’s sobering to note that during the Great Recession the state lost 14,500 jobs. So in one month we’ve lost one-fifth as many jobs as we lost during the Great Recession.
These numbers do not reflect anywhere near the full impact of the closure of many parts of the economy. They reflect the situation as of early March, when the surveys were taken. Most people lost their jobs in the last two weeks of March.
We will get a more complete picture of the economic devastation when the April labor market numbers come out May 22. But we know that at least 70,000 Vermonters have applied for unemployment insurance, and the number could be as many as 100,000.
Taking those numbers into account, I expect that Vermont’s April unemployment rate will be in the 15% to 20% range, nearly an order of magnitude higher than it has been for the past year.
Vermont’s unemployment rate has never been in the double-digit range since state unemployment rates have been calculated. In the Great Recession it peaked at 6.9%; in the devastating recession of the early 1990s it hit 7.0%; in the 1982 recession it peaked at 7.1% and in 1976 it was at a record level of 8.7%. April’s rate will be more than twice as high.
April’s job losses will amount to several times the 14,500 jobs we lost over a two-year period during the Great Recession, and the loss will be compressed into two months.
If April’s job losses are on the order of 50,000, it will represent a 16% decline. A loss of 70,000 jobs translates into a 22% job decline. During the Great Depression, the U.S. economy shed 25% of its jobs between 1929 and 1933.
The current sharp job decline, and equally rapid increase in unemployment, should not be prolonged. In that regard, it will not be a repeat of the Great Depression. Any forecast of what the economy, and jobs and unemployment will be like several months from now, of course depends critically on the course of the pandemic.
As of mid-April, it looks like we are at the pandemic’s peak and people will begin to go back to work, so the worst economic numbers will be in April and May, and we should see unemployment slowly go down by early summer. But it will be a long time before anything resembling normal, whatever that means in the future, returns to the Vermont economy.