What if jobs don’t come back? Stanford study says 42% of job losses will result in permanent job loss. It’s a perfect storm of stupid in the stock market right now

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Many Jobs May Vanish Forever as Layoffs Mount With over 38 million U.S. unemployment claims in nine weeks, one economist says the situation is “grimmer than we thought.”

The PDF of the Borrero, Bloom, and Davis working paper

I’ll try to quote some relevant sections from the NYT article:

“I hate to say it, but this is going to take longer and look grimmer than we thought,” Nicholas Bloom, an economist at Stanford University, said of the path to recovery. Mr. Bloom, a co-author of an analysis of the coronavirus epidemic’s effects on the labor market, estimates that 42 percent of recent layoffs will result in permanent job loss.

“Firms intend to hire these people back,” Mr. Bloom said, referring to a recent survey of businesses done by the Federal Reserve Bank of Atlanta. “But we know from the past that these aspirations often don’t turn out to be true.”

In this case, the economy that comes back is likely to look quite different from the one that closed. If social distancing rules become the new normal, causing thinner crowds in restaurants, theaters and stores, at sports arenas, and on airplanes, then fewer workers will be required. Large companies already expect more of their workers to continue to work remotely and say they plan to reduce their real estate footprint, which will, in turn, reduce the foot traffic that feeds nearby restaurants, shops, nail salons and other businesses.

Are the bulls here continuing to be bullish if this happens?

 

Fed’s Williams Warns of Worsening Unemployment

New York Fed President John Williams Thursday pledged unwavering commitment to limit the economic damage from Covid-19, warning of worsening unemployment and stating it will be some time before a clearer view on the economy develops.

“It Felt Like A Death”: 20% Of Illinois Restaurants Will Go Out Of Business In Coming Months

“It felt like going through the grieving process, which I still am. Any time I thought about it, and I looked at the prospects, it just, in my gut, didn’t feel like it was something that would be workable.”

 

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