What about all of those job losses? It’s the question that’s on a lot of people’s minds right now. After the last few weeks of unemployment claims and it’s the topic today I copied out of here, a copy of the KCM blog today. And if you haven’t read it, I’d say go and check it out.
We were, we’re writing blogs every single day on a current topic. With regard to this market, it says the pain of unemployment, it will be deep, but will not last long. So let me kind of unpack that for just a minute, the pain of unemployment. So no doubt if you’re reading this today, the number of people that you have influence with, you’ve probably known somebody, if not, that felt the pain of unemployment. And we’re seeing some significant unemployment right now. Greater in the last few weeks when we’ve ever seen in this country.
The Depth and Length of Job Losses
Now we talk about two things. When it comes to unemployment, we’re going to talk about depth. Meaning how many people are unemployed and then the length for how long.
So, in this blog, it’s going to be deep. A lot of people are going through unemployment. In perspective to history, it will not be as long as prior unemployment scenarios. We’ve heard it compared to people were saying, “Hey, this is going to be greater than the housing collapse or great recession, we’re talking about, this is going to be worse than the great depression.” So I want to address some of those things in this. Okay. So let’s kind of start here with weekly unemployment claims people that file for unemployment.
Each week we know we started out, March there, 3.3 million went up 6.9, 6.6 last week, 5.2 and we’ll get another number this week. So a tremendous amount of unemployment, tremendous amount of people losing their jobs. While we do believe these are jobs that are being lost right now, due to the pause. The pause button that’s been pressing the economy. This is not due to fundamental issues in industry or with the economy, that we will see those jobs come back.
Now, I’m not saying that everybody, every one of those jobs are going to come back. When restaurants open or is every single server going to get hired back because every single, situation, the job going to be replaced, maybe not, probably not. But we know a lot of those, will, so let’s compare these job losses to the great recessions is telling.
The Great Recession
So what we know right now, and this number is going to go higher, is we have 22 million people that filed for these initial, unemployment claims. The number of jobs created just to put that in perspective. The number of jobs created over the last 10 years, really, since the great recession is 24.8.
We’ll likely surpass that coming up here real soon. And while again, these jobs have been created, these haven’t gone away. Fundamentally these will come back when the economy comes back, it just gives you comparison. You sit in the middle there, the 22 million, where we stand today on the right. The 8.7 million was the peak, or the number of job losses through the great recession.
And so we’re looking at a number here multiples higher than that. So the reason I bring that up is just to give you a perspective when somebody says, well, three times as many people or whatever number are losing their jobs today as compared to 2008, they’re right they’re right in job loss is significant, but fundamentally what we want to look at.
Forcasting Unemployement Rate
It is what caused those job losses and how long it is predicted to last. The first is 2020 unemployment rate forecast. Look at what our major institution forecasting unemployment to be. Goldman Sachs at 15%, uh, Merrill Lynch at 10%, JP Morgan, 8.5% And Wells Fargo at 7%. So, if we look at this, we took, um, Goldman Sachs projection at 15%, and then they kind of give a projection for three years, kind of going out and we graphed that against the great recession and the great depression to give you perspective on the unemployment scenario.
So let’s kind of wrap here on this slide. It says more depth, less length. I want to focus your, your eyes to the top line here, where you see two years, nine years in 12 years in black, we have the COVID-19 projections, the most conservative meaning the highest projections, uh, in Brown is the great recession and red is the great depression. So what you want to look at is you want to look at depth, meaning the number. Uh, people that lose their jobs and you want to look at the length and let’s be clear. Length is much more important than depth. And so in this, you see us in that hitting the 15% Mark that Goldman Sachs has projected that’s the Goldman Sachs projections.
But what this signifies is, where did we start? Where were we at before? And how long does it take us to get back there? Now, Goldman Sachs is saying, Hey, we’re starting at 15% this year, and then it’s going to take us two years. To get back to where we were. So it’s not gonna, you know, we’re gonna flip a light switch on and, uh, and all of this is going to be over and I’m ready to get your job back.
And we just go back to life as is normal. I think we all know there’s some things that gotta be figured out, but when we compare that to the two, the length of the great recession, we’re nowhere near it, where it took us nine years to get back to prior unemployment numbers from, from 2008. And, but, but what we see as much more depth.
So the, the equivalent of this is, you know, you want somebody to come up and, and, uh, maybe, maybe, you know, hits you in the back of the head and knock you down or just coming in. It just hits you for awhile. Um, and what would you prefer there to get it over with or what, and so different scenario there with regard to.
The great recession. And then you compare it to the great depression, uh, nowhere near in depth or in length could, could the 15% be revised from today. Absolutely. Those projections more than likely revised. Um, now w w we’ll go higher. We’ll go lower. I don’t know. I don’t have a crystal ball, but, but to compare this to the great depression there, some people have said that maybe in the, you know, um, uh, This does not frame up anywhere near what we saw in the great depression of year after year of 20 plus percent in this country of unemployment.
Matter of fact, took 12 years to get back to where, uh, where we were. So. That gives a little bit of perspective to the employment piece. Not saying people aren’t going to be affected by that. Not saying it’s, you know, um, everything’s going to come back on. Right, right. When the economy starts to come back online, it’s going to take, take some time.
But, but this will give you perspective to how, how that all works.