CORONAVIRUS

Worst quarter in U.S. history, economists say

Jobless rate underreported, panel believes

The way businesses interact with customers, employees and suppliers as a result of the coronavirus pandemic will be felt for years to come, according a panel of economists and researchers.

The University of North Carolina Kenan-Flagler Business School and its affiliated Kenan Institute of Private Enterprise convened the panel after recent economic reports showed the current quarter will be the worst in the nation’s history.

About 7.5 million people who were furloughed and stayed at home misclassified themselves as employed in the last BLS survey. If this is true, the actual unemployment rate is actually higher by 5 percentage points and closer to 20 percent.

- Elena Siminitzi

UNC Professor of Finance

“The Bureau of Labor Statistics last week said the April unemployment rate was 14.7 percent, which was the highest since the Great Depression, but it may have been severely underreporting the true unemployment rate,” UNC Professor Elena Simintzi said during the Tuesday webinar

“About 7.5 million people who were furloughed and stayed at home misclassified themselves as employed in the last BLS survey. If this is true, the actual unemployment rate is actually higher by 5 percentage points and closer to 20 percent.”

May's Unemployment rate will be worse

Simintzi estimated May’s unemployment rate “will be 20 percent or higher because 7 million additional first-time claims for unemployment were filed last week.”

The retail sector has been hit particularly hard by pandemic-related shutdowns. UNC Associate Professor Saravanan Kesavan said getting consumers to shop again will take some fundamental changes to the retail operating model.

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“Consumer expectations of safety have risen tremendously,” Kesavan said. “Retailers and the restaurant industry can no longer treat safety as just a priority, but they need to treat safety as a non-negotiable precondition to work. Any adverse event that can happen will potentially have big implications for business outcomes.

“The psychological impact of the coronavirus is probably going to linger in the customer’s mind for a very long time.”

Compassion, empathy needed for retail employees

Retailers, he added, also need to have empathy and compassion for their employees.

“Unlike nurses, doctors or EMT personnel who signed up for hazardous work conditions, retail associates and restaurant workers never signed up for work where they could be infected with a life-threatening disease,” Kesavan said.

“It is important to be compassionate toward these employees, and many times it makes good business sense. If a manager feels an employee is distracted about their health, it is better to send them home with full pay and eliminate the opportunity for error than having them in the line of fire and hoping for the best.”

Kenan Institute Research Director Professor Christian Lundblad said the nation’s gross domestic product is expected to contract by 35.4 percent in the current quarter.

“There’s obviously a lot of uncertainty about what will happen in the rest of May and June.” Lundblad said. “How deep will this go on beyond 2020? There may be additional contractions as we navigate the economy going forward.

U-Shaped economic recovery projected

“I think this leaves us with an elongated U-shape economic recovery. Putting the puzzle of the U.S. economy back together is not going to be a trivial exercise.”

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Our most important Coronavirus coverage is free to the public.

If you believe local news is essential, especially during this crisis, please donate. Your contribution will support news resources to cover the impact of the pandemic on our local communities.

All donations are tax-deductible.