13.3% unemployment rate
8th June 2020
Tyler Cowen, a Real Economist at GMU.
That one surprised me, as indeed it did most other economists. What should I learn from this episode? After all, labor market adjustment was relatively slow coming out of the 2008 crisis.
My tentative hypothesis is that “matching” is more important than I had thought (and I already thought it was quite important, relative to other macro commentators). One feature of the current layoffs and rehirings is that the ties between workers and firms apparently were not so severed in the first place. For most sectors (cruise ships aside, etc.), no “rematches” were required, and so rehirings were accomplished very quickly. As demand (partially) returned, employers wanted at least some of the old workers back, and workers wanted their old employers back, and then it happened. “Figuring out where I belong” did not slow down the process very much.