In November 1984, President Reagan said it was “Morning in America”. Good times were back again and the unemployment rate had fallen to 7.2%. He won 49/50 states (including Massachusetts) on the back of a booming economy.

Today, the unemployment rate is 6.9%.

In the Great Recession, it took more than 4 years for unemployment to fall from a peak of 10% to 6.9%. This time it took 6 months (from over 14%).

Lars Christensen might still be correct in his spring prediction that the unemployment rate would fall to 6% by November (these figures were for October.) At the time Lars made the prediction, most experts were highly skeptical.

People will say, “It’s much worse than the unemployment figures show”. Yes, but it’s much worse precisely because it’s a supply shock, not a demand shock.

Supply shocks are really weird.  And fiscal stimulus is not going to fix this problem (although it can provided needed relief to jobless workers.)  It’s won’t give a job to a parent staying home to take care of kids because schools are closed, and thus isn’t even counted as unemployed.