New recession will bring unprecedented job loss and GDP decline as economically disruptive measures remain necessary to save lives
AUGUSTA, Maine — The coronavirus pandemic will bring a swift and unprecedented recession, according to a new report published today by the Maine Center for Economic Policy.
Late March’s record-breaking unemployment claims will likely herald breakneck job losses, with Maine projected to lose 61,000 jobs by June — three times the numbers lost during the entire Great Recession.
The spread of COVID-19 is straining the public health system while necessary measures to limit transmission, such as social distancing and widespread closures and cancellations, cause shocks to supply and demand that have dramatically reduced economic activity.
While a recession is all but inevitable, the worst of the potential damage to Mainers is not a foregone conclusion, said Sarah Austin, a MECEP policy analyst and the report’s author.
“The length of recovery and the amount of human suffering this recession causes are still within our power to control,” Austin said. “Policy choices by state and federal leaders will determine whether Mainers can afford health care, food, housing, and other essentials — even if their jobs are on hold and their children’s schools are closed. They will also determine whether small businesses can cover their expenses and avoid layoffs as consumer demand shrivels. Both those goals must be met to ensure a prompt recovery once the public health crisis has subsided.”
The report includes several key findings that describe the shape of this new recession. Those include:
- Economic disruption is necessary to save lives: Roughly half a million American lives could be saved by proven effective containment measures, even as those measures are likely to lengthen the duration of the recession.
- Late March unemployment claims broke state and national records: Nearly 21,500 Mainers filed new claims for unemployment benefits in the week ending March 21 — more than 80 percent more than the previous record set during the state government shutdown in July 1991.
- 61,000 Maine jobs projected to be lost between February and June of this year: Experts with the Economic Policy Institute modeled national and state job losses, based on second-quarter GDP freefall predicted by economists with top forecasting firms.