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Can Colorado Avoid the Rising Male Unemployment Rates Across the US?

Even as women enter the workforce at rates never before seen in our country, a disturbing trend is arising among men between the ages of 25-54.

A new Common Sense Institute study finds these men, in their prime working-age years, are leaving the workforce. 

How many men? Today, across the US, roughly seven million men are not in the labor force, or NILF, as the US Department of Labor refers to them. This does not apply to men who are employed part-time. In fact, one only needs to work an hour in the period being recorded to be counted as employed.

These men are neither working nor looking for work. One of the reasons the unemployment rate across the country appears to be so low is because for every man looking for work, two-to-three men are NILFs.

READ: Colorado’s Labor Market Paradox —  Plentiful Jobs, Mismatched Talent

This trend for men is not a matter of being in transition or working to take care of households while their spouses go to work. When time-use studies are done to document how these men spend their non-working time, they spend much more time than working men or women in general on socializing, relaxing and leisure. This includes an alarming amount of video game playing. 

Married men and men with kids are more likely to be working. Married black men work at a higher rate than single white men. Men with higher education levels are also more likely to be working. Men’s retreat from the workforce has also occurred with a retreat from civil society. NILF men are likely to be unmarried and not in clubs, involved in church or otherwise engaged in their communities. 

This is also not a blip. Prime-age working male labor force participation rate (LFPR) has been trending down since the 1960’s and continues post-pandemic. In 1969 the LFPR of prime working age men was 96.1%. Since Title IX was enacted in 1972, women have consistently increased their labor force participation rate, reaching a post-pandemic high of 77.8%, while men’s has dropped to a current national level of 89.7%. 

Women are advancing their educations at a higher rate than men as well. In 1970, just 12% of young women had attained bachelor’s degrees, compared to 20% of men. By 2020 4 % of women had a bachelor’s degree, compared to 32 % of men. Since better-educated men are more likely to be in the workforce, this national trend is concerning. 

But what about Colorado? The state’s male LFPR is higher than the national LFPR at 92.5%. Note that Colorado also has the second-highest percentage of college-educated citizens. While encouraging, now is the time to sound the alarm in Colorado. Despite an overall better LFPR for prime-age working men in Colorado, the rate has dropped four percentage points since 1977 while Colorado’s female LFPR has risen 20 points to 83%.

READ: Guest Column — Closing the Racial Wealth Gap With Education and Financial Planning

At a time of low unemployment and a plethora of available jobs, the bigger question is why are men leaving the workforce at all? To start, for men with only a high school diploma, inflation-adjusted real wages have dropped since the 1970’s. It’s estimated that this factor alone accounts for 44% of the growth in labor force exit. 

Social factors contribute as well. As society has shifted and more men are born to single mothers, their likelihood of being nonworkers has grown. When single mothers are less educated, or have low household incomes, the boys growing up in these households are more likely to be nonworkers as adults. 

Perhaps most alarmingly, because work is not only a source of income, but also dignity, belonging and self-respect, the loss of work and the possibilities work creates lead to disconnection, hopelessness and negative emotions that cause both physical and psychological pain. The US male life expectancy has dropped and the rate of deaths of despair are increasing. Men in Colorado accounted for 77% of suicide deaths from 2010 to 2020 and 62% of suicide deaths. Colorado has the sixth highest suicide rate in the US.

READ: Transform Your Mental Health in the Workplace — Strategies for a Healthier, Happier Experience

In terms of economic empowerment, it is a great time to be a woman in our country. But men not working is a problem, not just for our economy, but for our society. 

What if women’s gains since 1972’s Title IX law have occurred to the detriment of men? How might we recover these losses and build up all people moving forward?

In November 2021, the Global Initiative for Boys & Men published a report on the need for a Colorado Commission on the Status of Boys & Men. This report identified six areas where boys and men have been disproportionately impacted, including physical and mental health, education, careers and financial health, family and relationships, criminal justice and court systems, and male narrative in the public discourse. In each of these key areas, the trends for boys and men are concerning, but it is not too late. Now is the time for a state commission to be created to keep Colorado boys and men from falling farther behind.


Tamra Ryan is the CSI Coors Economic Mobility Fellow and CEO of the Women’s Bean Project.

Embracing Neurodiversity in the Workplace: 5 Benefits of Hiring Neurodiverse Talent

Employment and the labor market are weird right now, right? Statistics demonstrate that only 62% of the labor force is participating. In Colorado, there are two jobs for every person looking for a job. Yet, companies everywhere are reporting a labor shortage and a lack of qualified applicants. In the skilled trades, only two individuals are replacing the five that retire, leaving an ever-increasing gap. Five generations are working together for the first time in history. Managers and teams are clearly struggling. But, here’s the question: Are these businesses considering actively seeking neurodiversity in the workplace?

READ: How Business Leaders Can Embrace a Multigenerational Workforce 

Some companies are getting creative working with non-profits and workforce development centers to develop paths for individuals moving into our great country and state, while others are working to give second chances to those seeking them. But what continues to surprise me, is that no one is looking at the neurodiverse community and embracing those that are neurodivergent. 20 percent of our population falls into this category! What’s going on? 

Colorado just become the first state to launch a Chamber of Commerce for this disenfranchised and underrepresented group in 2022 (The Colorado Neurodiversity Chamber of Commerce). That comes 34 years after the launch of the Women’s Chamber in 1988, and 59 years after the Black Chamber in 1963.  But in just a few months over 60 big companies have already taken notice and jumped on board. Companies like Charles Schwab, Keiwet, UC Health, Trimble, the Denver Airport, The Dumb Friends League, and more. 

They’re recognizing the possibility and trying to embrace it. Here’s the thing, Neurodiversity in the workplace already exists, and neurodivergent adults are struggling because companies don’t know what it is and how to support their employees that deserve the support enablers to be successful. 

READ: Veteran Unemployment — Untapped Workplace Resources

So let’s start — first, what is Neurodiversity?

Neurodiversity refers to the natural variation in human brain function and the ways in which people process information and interact with the world around them. It recognizes that there is a wide range of neurological differences that are normal variations of the human experience and that these differences should be accepted and valued as part of the diversity of the human population. The concept of neurodiversity includes conditions such as autism, ADHD, dyslexia, Tourette’s syndrome, and other neurological differences. It emphasizes that these conditions are not necessarily disorders or deficits but are variations in how people’s brains are wired.

Society should be more inclusive of people with neurological differences and find innovative ways to support their strengths and abilities. Also, we need to reject the idea that these conditions should be “cured” or eliminated, and instead promote acceptance and understanding of neurodiversity as a natural part of human diversity.

And as a business — why hire Neurodiverse talent?

Implementing neurodiversity in the workplace can bring a variety of strengths and benefits to your company. Here are a few examples:

Unique perspectives

Neurodiverse individuals often have different ways of thinking and processing information, which can lead to innovative problem-solving and creativity. Their unique perspectives can also help to identify new opportunities and strategies that may have been overlooked by a more homogeneous team.

Attention to detail

Many neurodiverse individuals have a high level of attention to detail and can excel in tasks that require precision and accuracy. This can be especially beneficial in fields such as engineering, data analysis, and quality control.

Loyalty and commitment

Neurodiverse individuals often have a strong sense of loyalty and commitment to their work, and can be highly dedicated and motivated employees.

READ: 5 Tips for Building a Strong Company Culture in a Hybrid Work Environment

Ability to focus

Some neurodiverse individuals have the ability to hyper-focus on tasks that interest them, which can lead to high productivity and efficiency in those areas.

Diverse skill sets

Implementing neurodiversity in the workplace can bring a wide range of skills and strengths to your business, including strong memory, spatial reasoning, pattern recognition and more.

The Harvard Business Journal did a study and found that neurodistinct individuals can be up to 140% more productive than their neurotypical peers and that’s good business.

There’s so much more to add but It’s time to start the conversation and become aware of this incredible group. They’re already in your organization. And if not, they should be. Hire them not as a DEI intuitive because your company, employees, and teammates deserve a culture of inclusivity and talent. 

Questions? Good! Let’s start the conversation and move forward together. 


Danny CombsDanny is the Founder of TACT – Teaching the Autism Community Trades. The states leading supported employment program. Additionally, he’s the Co-Founder of the Colorado Neurodiversity Chamber of Commerce, serves on the Employment Taskforce the for Autism Society of America, is an Air Force Reservist recognized in the Pentagon for his leadership and serves on the Diversity, Equity, and Inclusion Council on Buckley Space Force Base. Danny has a Master’s Degree in Education, is a Board-Certified Cognitive Specialist, a Certified Autism Specialist, also a Grammy Award Winner and a classic car junkie.

Colorado Finishes 8th in the Nation for Employment Growth in 2022

Colorado ended 2022 with continued strong job growth and is outperforming the nation in many areas, according to a report released today by the University of Colorado Boulder and Colorado Secretary of State Jena Griswold.

The Quarterly Business and Economic Indicators report is prepared by the Leeds Business Research Division (BRD) at CU Boulder in conjunction with the Colorado Secretary of State’s Office. The latest report for the fourth quarter 2022 shows that Colorado recorded 48,806 new entity filings, posting the largest quarter in the report’s history. Filings increased year-over-year by 37.2% and 11.8% quarter-over-quarter.

READ — Top Insights in the Colorado Job Market: A Look Back at 2022

However, delinquencies and dissolutions were also up year-over-year. There were 13,293 dissolutions in Q4, up 17% year-over-year and 14.5% from the previous quarter.

Existing renewals remained positive, increasing 2.9% (171,210 renewals) in Q4 year-over-year and 4.5% quarter-over-quarter.

“Colorado has continued our upward economic trajectory,” said Secretary Griswold. “With another strong year of employment gains and continued job growth, new business entity filings growing at a record pace and inflation diminishing faster than the national average, Colorado continues to lead when it comes to owning and operating a business.”

Inflation in the state continued to improve but remained high. In the Denver-Aurora-Lakewood region, the Consumer Price Index (CPI) increased 6.9% year-over-year in November 2022, compared to 7.1% nationally.

December 2022 employment growth in the state increased 3.7% (104,700 jobs) year-over-year, which made Colorado eighth best in the nation. The largest annual percentage increases came from professional and business services and leisure and hospitality.

The state’s high labor force participation rate is driving down the unemployment rate and pushing up wages. Colorado’s unemployment rate fell to 3.3% in December, below the national rate of 3.5%.

READ — Veteran Unemployment: Untapped Workplace Resources

Colorado’s per capita personal income of $75,557 ranked seventh nationally, and per capita personal income growth (7.9%) ranked first for the second consecutive quarter.

Real gross domestic product (GDP) in Colorado grew 3.2% year-over-year in Q3, sixth highest in the nation. Real GDP in the nation also grew 3.2% in Q3.

Retail gasoline prices continue to yo-yo in the state: Prices began to normalize in late 2022 after spiking earlier in the year, according to the Energy Information Administration. In January 2023, prices were down $1.22 per gallon in the state compared to the June peak, but prices in mid-January were up $0.92 per gallon from the end of December.

You can find monthly information on key economic statistics and trends that impact the state on the Colorado Business and Economic Indicator Dashboard, launched by the Colorado Secretary of State’s office in conjunction with BRD.

What to do when unemployment benefits expire

When the CARES Act was passed on March 27, 2020, one of its key elements was providing an additional $600 per week in federal aid to those receiving unemployment benefits from their state office.

This money has provided a much-needed lifeline to the tens of millions of Americans who have found themselves unemployed due to COVID-19. 

However, this federal aid expired on July 31, 2020. While new additional aid may come as a result of the executive memorandum signed by the President earlier this month, it won’t be available indefinitely, which begs the question: What do you do when your unemployment benefits are drastically reduced or eliminated?

When unemployment benefits are cut

It can be overwhelming to find yourself in this situation, but there are some financial steps you can take to stay afloat until you find steady employment again.

Cut expenses

For many people, cutting expenses has been a theme in 2020, so you may already be very familiar with where your money is going. But, it can still be useful to take another hard look at where you’re spending and consider ways to reduce costs.

For example, if you’ve turned to food delivery or grocery delivery during the pandemic, you may have noticed an uptick in items you wouldn’t normally purchase.

Impulse buying snacks can be just as easy with a click as it is with tossing items into a cart. Aim to cook more at home or stick to your must-have grocery needs.

And, if you have multiple subscriptions to streaming services such as Netflix and Hulu, pick your favorite and cancel the others. Each of these expense reductions may seem small at first but they add up, especially over time.

Contact your creditors

Times are tough, and those you owe bills to may be more understanding than you realize. If you don’t think you’ll be able to make your minimum credit card payment, contact that creditor, explain your situation, and find out if you can get a lower interest rate or minimum payment, or payment deferral.

Similarly, if you don’t think you’ll be able to pay your mortgage or your rent, get in touch with your landlord or mortgage provider and ask for leniency. You may be surprised how willing people will be to work with you.

Look into part-time or temporary jobs

As you continue to seek long-term work, you could pick up some side jobs in the meantime. Grocery stores and delivery companies such as UPS and FedEx are actively hiring in many regions.

You could also work as an independent contractor for companies such as Uber, Lyft, InstaCart, GrubHub, Postmates, Wag or Rover.

These side jobs don’t necessarily have to become your permanent source of income but could help bridge the gap while you find your next full-time position. Make sure you check with your tax professional on the paperwork and tax needs for getting started with work like this. 

Seek support from other government agencies and nonprofits

Even when federal and state unemployment benefits expire, there are other government programs that can help you stay on your feet during turbulent times. Some of these include:

  • Home Affordable Modification Program: If you’re a qualified unemployed homeowner, this program can help reduce mortgage payments.
  • Temporary Assistance for Needy Families: Each state has a Temporary Assistance for Needy Families program, which can help with food stamps, financial support, and job training and searching.   
  • Supplemental Nutrition Assistance Program: This federal food stamp program can help you purchase food and other qualified items.
  • Medicaid: If you’re unemployed or under-employed, Medicaid can help provide medical benefits and services.
  • WIC: If you’re an unemployed or low-income woman, the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) can help provide food and nutritional support if you’re pregnant, breastfeeding, postpartum or have children under age five. 

Nonprofits can be another resource to turn to for help keeping your kitchen stocked, preparing for job interviews, babysitting assistance and other needs. If you’re not sure where to start, the 2-1-1 Call Center can help you identify resources in your area.

At UMB, we’re always here to provide support, guidance and help you navigate difficult situations, so please know that you can reach out to us anytime to discuss financial education or relief measures.

Together, we can work through these unprecedented times and enjoy the brighter days that are ahead.

Nicole Watson is Senior Vice President and Territory Director of Consumer Services at UMB Bank. 

Learning New Skills for the New Normal

As of June 2020, the Bureau of Labor Statistics indicated that the United States’ unemployment rate was 11.1 percent. That’s higher than during the height of the Great Recession (10.6 percent) and at the peak of the ’80s recession in 1982 (10.8 percent).

Though these numbers represent a huge improvement over the previous month, 17.8 million people are unemployed, including restaurant and hotel employees, retail staff, people who support the sports, travel and entertainment sectors, oil and petroleum workers, software developers, writers, higher education administrators, and this doesn’t even begin to tally up the losses for gig workers.

Though the US government approved the mighty $2-plus trillion CARES Act to shore up the economy, a measure that put $1,200 in every wallet, the coronavirus continues to rage across the country and the federal government’s $600 unemployment enhancements expired in late July.

For those who have lost jobs, experienced furloughs or seen pay reductions, the pandemic represents a chance to not only adapt to the new normal but also retool what you have to offer. Were you stuck in a low-wage job? Is there another career you’ve wanted to pursue? Who might be hiring in the pandemic/post-pandemic job market? Do you need new skills for this brave new world that’s coming?

Historically, when recessions hit, people tend to return to school. That’s because the opportunity cost—the jobs and earnings you give up while in school—plummets, making education more attractive. A certificate or new degree can add shine to your resume and position you for a career do over.

Nobody knows what the job market will look like in the aftermath of the coronavirus, but if you find yourself recently unemployed, now might be a good time to reconsider your education, especially if you have a clear goal in sight and can achieve your goal without incurring too much debt.

Because of the pandemic, colleges and universities recognize that prospective students’ financial situations may have changed. “Even now, people should be able to accomplish their educational goals,” observes Mj Huebner, the vice president for admission and financial aid at Kalamazoo College and veteran enrollment management consultant. “Talk to a financial aid counselor. Colleges and universities have really tried to understand individual family circumstances as they relate to unexpected COVID expenses. Colleges and universities have also tried to make changes to allow for a more seamless and easier going-to-college process.”

Depending on what you want to accomplish, community colleges and career and technical institutions can offer lower-cost—and quicker—alternatives to traditional four-year colleges and universities. Should you want to become a medical doctor, you can certainly start at a community college, which can lower your overall costs, but you’ll finish in medical school—six or seven years down the line. If you want to become a pharmacy technician—a hot degree if ever there was one in our nation’s hot zones—you can earn a certificate in an accredited program and begin practicing in less than a year.

At Emily Griffith Technical College in Denver, educators have moved most courses online or created hybridized models of in-person and online models for programs such as automotive, welding and cosmetology that require hands-on instruction. The college also continues to offer programs in technology and healthcare to prepare students for post-coronavirus workforce trends they’re already noticing.

“The widespread telehealth and work-at-home phenomena are likely to continue,” says Stephanie Donner, executive director at Emily Griffith Technical College. “So jobs that support home-based workers and healthcare should be in high demand. Think software developers, network administrators, cyber security professionals and training help. And clearly there’s a huge need for additional healthcare workers and domestic manufacturing capacity to scale medical products and equipment.”

To that end the college recently launched the online Google IT Support Professional Certificate to add to programs they already offer in computer networking, cybersecurity, web development, multimedia and video production along with healthcare opportunities such as practical nursing, phlebotomy, pharmacy technician and targeted trades.

“These programs and others that we offer can help displaced workers prepare for the future,” Donner explains. “Emily Griffith is here to help people reenergize their careers and return to work re-skilled and ready to contribute to a new Colorado.”

Leslie Petrovski is a freelance writer supporting Emily Griffith Technical College.

Accessing retirement accounts in a time of uncertainty

Americans entered the year with a great economy, low unemployment, and anticipation of continued economic success.  The unemployment rate reached lows not seen in decades and Americans were feeling confident. As Valentine’s Day approached, rumors of a virus in China started to hit mainstream media.  Shortly after, the market started to decline, and the first case of COVID-19 was confirmed in the United States.

As the Coronavirus spread, stay-at-home orders were put into place, the stock market crashed, and weekly unemployment claims spiked to record highs. With unemployment in double-digits, and layoffs surly to follow into the summer, Americans are scared.  For those unemployed, there are still obligations to pay.

As fear gripped Americans, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).  This bill provided checks to Americans under certain income limits along with help to small business owners.  The CARES Act also altered the distributions rules to make it easier for people impacted by COVID-19 to access retirement accounts. In a time of uncertainty, knowledge will help guide important decisions of many Americans faced with tough decisions. As Plato said, “Human Behavior flows from three main sources: desire, emotion, and knowledge.”

Standard rules

Previously, investors taking money out of retirement accounts (401(k)s, IRAs, 403(b)s, ect.) prior to age 59 and a half would face ordinary income tax, along with a 10% tax penalty on the amount of withdrawal in the year of the distribution. Within an Individual Retirement Account (IRA), there were a few limited exceptions to the 10% tax penalty including first time home purchase, higher education expenses and disability — to name a few.  Most 401(k) accounts are only available for withdrawal after separation from service.  A loan may be available from a 401(k) account whether still employed or no longer working, up to $50,000 or 50% of the accumulation, whichever is less.

Eligibility for relaxed rules

Under the CARES Act, distribution rules were changed in favor of investors impacted by COVID-19 to make it easier to access retirement accounts with a lower tax burden.  To qualify for the relaxed rules, qualified participants must demonstrate they were diagnosed with coronavirus, had a spouse or dependent diagnosed, or experienced a layoff, furlough, reduction in hours, or were unable to work due to COVID-19, or experienced a lack of childcare because of the virus. Without a valid COVID-19 related reason, the standard rules will apply.

CARES Act relaxed distribution rules

Under the CARES Act, Americans who qualify can take up to $100,000 out of eligible retirement accounts in 2020 without paying a 10% early withdrawal penalty. The act also suspends a mandatory 20% withholding that usually applies to distributions from employer sponsored retirement accounts. Investors will still owe ordinary income on IRA distributions, but a great amount of flexibility is given to manage the tax liability.

Ordinary income taxes from the distribution can be spread over a three-year period or can be paid in 2020 if income will be lower due to a furlough or layoff.  The CARES Act also gives individuals to three years to pay the money back into a retirement account so the distribution would not be taxable compared to just 60 days under the standard rules.

The available loan amounts, if available, have doubled to $100,000 or up to 100% of the vested balance in 401(k)s.

Should I rollover my 401(k) to an IRA?

For employees that have been let go, a decision must be made to leave money in a previous employer’s 401(k) or complete a rollover to an IRA. A 401(k) may provide the advantage of a loan option not given by an IRA but rolling to an IRA has several advantages.

An IRA allows investors to choose where they would like to invest their retirement account.  This means investors can choose a low-cost investment company which often have lower fees or a professional asset manager. An IRA will typically provide investors with greater fund options with lesser transactional paperwork. Each investor is different and should consult professionals to help make this decision.

Knowledge in power

In the face of fear and uncertainty, crucial decisions must be made based on facts and changing rules.  The CARES Act relaxes the rules to help Americans who qualify use retirement accounts through the pandemic. With more options, smart decisions based on investment and tax law will save money and ease the anxiety of many Americans without employment.

What will economic recovery from COVID-19 look like?

A recession is upon us due to the public health crisis causing a global societal shock. The COVID-19 virus has created many unknowns, but as we work through the crisis, there are some things we do know or have a high degree of confidence in, such as spiking initial unemployment claims as well as monetary and fiscal stimulus measures. In addition, we believe much of the upcoming economic data will be shockingly bad.

The narrative now changes to what the economic recovery may look like, and there are two primary drivers of what comes next. The first is epidemiological, meaning the progression of the global pandemic. The second driver is sociological: the response of consumers, businesses and governments.

Economic recovery scenarios: Alphabet soup

The U.S. has experienced 10 recessions since 1950. Each historical recession/recovery cycle had unique components, such as inflation or oil shocks, yet each cycle had common characteristics such as monetary and fiscal stimulus. Historical recessions/recoveries cycles have taken several patterns:

  • V-shaped: Characteristics of this recovery include sharp declines in GDP with spiking unemployment. In the current environment, a V-shaped recovery would see immediate recovery in the third quarter, the COVID-19 virus solved, and the economy recovering lost output by end of 2020.
  • U-shaped: This type of recovery features sharp declines in GDP with spiking unemployment. In today’s scenario, this recovery would see stabilization in second half of 2020, the COVID-19 virus controlled, and material recovery in late 2020 and early 2021.
  • W-shaped: Sharp declines in GDP with spiking unemployment are calling cards for this type of recovery. A W-shaped recovery from our current situation would see the COVID-19 virus appearing to be controlled, the economy re-opening, COVID-19 cases re-emerging, and the economy once again shutting down.
  • L-shaped: This recovery involves sharp declines in GDP with spiking unemployment, the persistence of the virus, continued shelter-in-place orders, inadequate stimulus, and economic stagnation.

Economic recovery: Forecast

We are suggesting that the recovery will look like something between a “U” and an “L.”

We don’t think the recovery will be “U” shaped due to our assumption that a COVID-19 vaccine or treatment won’t be available until late 2020 or early 2021. In addition, the economic recovery will be modest due to high unemployment.

We also don’t think the recovery will be “L” shaped either. Our assumption is the economy will open in a few weeks, the virus will become more controlled, and adequate stimulus measures will be put into place.

Perhaps an upward sloping “L” shape, or swoosh, is the best descriptor of what we expect. U.S. GDP experienced a waterfall event as the country shut down and consumption ground to a halt. We anticipate that economic activity will slowly return to a sense of normalcy as the curve of new COVID-19 cases flattens and stimulus provides an economic backstop. We would expect modest growth continuing into 2021.

The contraction in U.S. second quarter real GDP will be unprecedented. The U.S. soft- closed on or about March 16 and vast amounts of stimulus soon followed. Since then, the available data is fluid and changing rapidly, making it difficult to interpret. That said, we expect GDP to contract by 26% in the second quarter. The Bloomberg consensus, which UMB is part of, forecasts a second quarter contraction of 25%. To demonstrate the complexity of forecasting in this environment, the range of second quarter GDP among the 70 Bloomberg participants is 0.4 to -65%, indicating that there are still a lot of unknowns.

The labor market has rapidly changed over the past two months. In approximately 30 days, 22 million Americans lost their jobs and filed for unemployment benefits. From July 2009 to February 2020, the U.S. created 22 million new jobs. The unemployment rate was 3.5% in February, the lowest since 1969. By the end of April, we expect unemployment to be approximately 25%, a record high. One positive note, more than half of the unemployed reported being temporarily laid off, suggesting that many could return to work quickly if conditions improve.

Game changers

One school of thought is that things took an abrupt turn for the worse, so perhaps things could take an abrupt turn for the best, creating a “V” shaped recovery. For this to happen, we think there are a few virus-related things that need to develop. As the following develop, our economic forecast will change as well:

  • Vaccine,
  • Treatment,
  • Widespread testing, and
  • Hospital capacity.

Risks: the “W”

A significant risk is the “W” recovery. In this scenario, spending collapses during the period of strict social distancing and rises when the economy reopens, but not to the pre-crisis level because of the shock to confidence, unemployment and other factors. There may be a brief overshooting to make up for some of the underspending during the lockdown, but if the confidence shock is long-lasting, the economy may start to slow again.

Another concern relates to the ability to open the economy and contain the virus. The risk is that this experiment fails, perhaps due to noncompliance and inadequate testing or tracking of hot spots, and another broad shutdown may be required. China, Italy, South Korea and Japan are all worth watching for clues.

A collapse in corporate earnings will place considerable strain on the capacity to service debt. There will be an unprecedented surge in corporate rating downgrades. China’s experience suggests that job losses and consumer caution will prevent demand from fully bouncing back to alleviate pressures on corporate debtors. When global GDP contracted by 0.5% in 2009, pre-tax earnings of global non-financial corporations plummeted by 45%. We’re expecting a 4.5% decline in global GDP this year, so there’s a good chance that earnings will fare worse than they did in 2009.

Some sectors will remain very vulnerable. Hospitality, leisure and some retail may never be the same. The service industry will take an obvious hit. But due to our inter-connected global economy, manufacturing is also in jeopardy. The 5.4% month-over-month plunge in industrial production in March, the sharpest monthly fall since 1946, highlights that while current coronavirus containment measures are primarily slamming the brakes on service sector activity, the manufacturing sector is also set for a significant downturn.


All the economic data suggests that a recession is upon us and the National Bureau of Economic Research, the official recession declarers, will likely tell us it started in March. We do anticipate that the recession will be short-lived, and the recovery will be slow and steady, taking the shape of an upward sloping “L”. Due to pent-up demand and abundant stimulus, U.S. GDP may see an impressive rebound in a single quarter. However, on a sustainable basis, we forecast that the recovery will be slow and steady into 2021. Let’s not forget that pre-crisis, potential GDP was approximately 2%, driven by the labor force growth rate and productivity gains. That hasn’t changed.