Cleveland Fed research estimates unemployment rate will likely peak below 20 percent amid the pandemic
After experiencing the longest expansion in history, the US labor market is going through tremendous stress due to the COVID-19 outbreaks across the country and the resulting mitigation efforts. In this Economic Commentary, Cleveland Fed research estimates that the unemployment rate will likely peak in May at about 16 percent and will come down rather swiftly over the last two quarters of this year, provided that the labor market is at least partially functional. An additional month of drastic mitigation efforts could add another 1 percentage point to the peak unemployment rate and push it to June.
“Most importantly, we think the shock is temporary,” say the researchers. “Unlike in past recessions, we know the underlying reason for the contraction in economic activity, and because the shutdowns are coordinated by federal and state governments, they could be reversed gradually once the public health emergency passes.”