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We Have Never Seen An Economic Collapse Quite Like This, And It Is Largely A Self-Inflicted Wound

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Michael Snyder
Economic Collapse
April 24, 2020

The rate at which the U.S. economy is unraveling is absolutely breathtaking. 

On Thursday, we learned that another 4.4 million Americans filed new claims for unemployment benefits last week, and that means that a grand total of more than 26 million Americans have lost their jobs during this pandemic so far.

To get an idea of just how dramatically this record-setting unemployment spike dwarfs what we witnessed during the last recession, check out these charts.

Prior to this year, the record for new unemployment claims in a single week was just 695,800, and now each of the last five weeks has been at least four times larger than that old record.

And as I discussed in an article earlier today, millions of those workers have absolutely no incentive to go back to work any time soon, because thanks to Congress they are bringing home more money now than when they were actually working.

So even if efforts are made to return the economy “to normal”, millions of workers will want to stay home until the $600 per week “unemployment bonus” finally expires.

The sad thing is that this new economic crisis is largely a self-inflicted wound, and I will explain why that is true later in this article.

But first let’s talk about where things currently stand.  Based on the unemployment claim numbers that we have been seeing, experts are now projecting that the current rate of unemployment in the U.S. “is about 16 percent”

With a labor force that totals about 162 million people, the claims figures suggest the unemployment rate is about 16 percent, or roughly one in six Americans — significantly higher than the 10 percent peak seen during the 2008 financial crisis. The previous one-week high for jobless claims was 695,800 in 1982.

For a long time I have been warning that the next crisis would make the last recession look like a Sunday picnic, and now that has actually happened.

In addition to an unprecedented number of initial claims for unemployment benefits, we have also absolutely smashed the all-time record for the number of “continuing claims”

A person who has filed an “initial claim” for Unemployment Insurance (UI) and still doesn’t have a job a week later is added to “insured unemployment.” The number of the “insured unemployed” – often called “continued claims” – skyrocketed to 15.98 million, by far the highest in the history of the data series. The high before this Covid-19 era was 6.63 million in May of 2009.

And now that Congress has given workers a tremendous financial incentive to stay unemployed, the number of “continuing claims” is likely to keep going higher with each passing week.

Of course this isn’t just happening in the United States.  Over in Europe, business activity is falling at the fastest pace ever recorded

“The eurozone economy suffered the steepest falls in business activity and employment ever recorded during April as a result of measures taken to contain the coronavirus outbreak,” it said.

The company’s purchasing manager’s index (PMI) dived to a record low of 13.5 in April, from the previous all-time low of 29.7 in March, confirming private sector gloom that is savaging the 19-nation eurozone.

To put those numbers in perspective, any reading below 50 indicates a contraction.

Needless to say, these absolutely horrific statistics are the result of the coronavirus lockdowns, but were these lockdowns actually necessary in the first place?

As I discussed yesterday, the only reason why any sort of a lockdown should be implemented is if the hospitals in a particular area are being overwhelmed, because if people are unable to get medical treatment that could definitely push the ultimate death toll from the pandemic higher than it otherwise would have been.

But in most parts of the U.S. and Europe right now, hospitals are not being even close to overwhelmed.

Keeping everyone at home is not going to defeat this virus or end this pandemic.  When you are dealing with a virus that spreads from person to person this easily, there is no way that you are going to contain it.  In fact, the U.S. just had 31,900 newly confirmed cases in the 24 hour period that just ended even though most of the nation has already been locked down for weeks.

Yes, these lockdowns have temporarily slowed down the spread of the virus, but the lockdowns have also extended the duration of this pandemic.  Ultimately, this pandemic is never going to be over until it sweeps through the population and “herd immunity” is achieved.  And as I discussed yesterday, 70 to 90 percent of the population is going to have to develop antibodies in order to get to that point.

And if you are waiting for a “vaccine” to get us out of this mess, you are going to be waiting for a very, very long time.  There has never been a successful vaccine for any coronavirus in all of human history, and the task of trying to develop one for COVID-19 has become exceedingly more difficult now that scientists have discovered that there are 30 different strains of the virus.

So the truth is that this outbreak is going to rip through our population, and nothing that our politicians can do will be able to stop that from happening.

But the good news is that new numbers from New York seem to indicate that we are closer to “herd immunity” than we previously thought…

Preliminary results from New York’s first coronavirus antibody study show nearly 14 percent tested positive, meaning they had the virus at some point and recovered, Gov. Andrew Cuomo said Thursday. That equates to 2.7 million infections statewide — more than 10 times the state’s confirmed cases.

The study, part of Cuomo’s “aggressive” antibody testing launched earlier this week, is based on 3,000 random samples from 40 locations in 19 counties. While the preliminary data suggests much more widespread infection, it means New York’s mortality rate is much lower than previously thought.

However, another study that was conducted in L.A. County found that only 4 percent of their residents had developed antibodies, and that is probably more representative of the nation as a whole.

In any event, everyone agrees that the vast majority of the U.S. population has not developed antibodies, and that means that there will be many more cases and many more deaths in the months ahead.

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And that is going to happen no matter how our politicians respond to this crisis.

So as long as our hospitals are not being overwhelmed, there isn’t a need for any lockdowns.  The final case total and the final death toll will be roughly the same whether there are lockdowns or not.

But these lockdowns are definitely killing our economy, and tens of millions of American workers now find themselves unemployed.

And if we continue to try to keep the U.S. economy shut down for a few more months, the economic damage will be incalculable.

Please don’t misunderstand what I am saying.  I am not saying that we should sacrifice lives in order to save the economy.  What I am saying is that about the same number of people are eventually going to die whether we have the lockdowns or not.  And if we can’t handle this, how in the world are we going to deal with what else is coming?

If you are elderly, have a compromised immune system or are in some other high risk group, you are going to have to quarantine yourself for the foreseeable future, but that would be true whether there are lockdowns or not.  The mortality rates for high risk groups are much, much higher than for the general population as a whole, and the danger is very real.

But everyone else should be allowed to get back to work, because most of the population is eventually going to catch this virus no matter what we do.  As long as our hospitals can handle it, we should proceed with life as normal.

Unfortunately, that isn’t going to happen.  Most of the current lockdowns are going to remain in place for quite some time, and this new economic depression is just going to get deeper and deeper.

This article was posted: Friday, April 24, 2020 at 3:54 am





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