Labor Pains

The Bank of England has projected the COVID-19 pandemic will cause GDP for the United Kingdom to decline 14% this year. That’s the worst economic performance in more than three centuries.

In 1706 (when the Bank of England was twelve years old) Great Britain was a very different place. With the Industrial Revolution fifty years in the future, the agricultural-based economy was devastated by wars and weather. The union with Scotland was still a year away, and Twinings had just manufactured its first tea bag.

Fast forward, across the pond the US economy has been similarly slammed with shocking labor numbers. From what seems now like an alternative universe, unemployment went from 3.7% at year-end 2019 to 14.7% today. And worsening.

The precipitous nature of this downturn has been astounding. As our Chart of the Week (thanks to S&P Global Ratings) illustrates, it took nine years to add 21 million US workers to payrolls; COVID-19 wiped them out in two months. No wonder given how quickly businesses were forced to close.