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As the COVID-19 pandemic continues on, so does the rising number of job losses in both Canada and the U.S. While these numbers are unprecedented, Eric Lascelles, Chief Economist, RBC Global Asset Management, looks at the reasons why this recession may not last as long as those in the past.


Hello and welcome to the download. I’m your host, Dave Richardson. And I’m joined again by RBC Global Asset Management’s chief economist Eric Lascelles. And once again, Thursday, April 16th, another huge jobless number, weekly jobless number, out of the US. We’ve had lots of reports out of Canada as well around people losing their job in the midst of this Covid-19 pandemic. And instead of focusing on the weekly number, as we have on previous podcast, I thought I’d ask Eric today about the cumulative effect. So if we look over the last month, I think we’re in the neighbourhood of over 20 million Americans who have lost their job and in around 2 million Canadians. And so, Eric, what’s the impact, the cumulative effect of all these job losses?

Well, Dave, it’s extraordinary, to begin with. We’ve never dealt with numbers of this magnitude before. And so even as we expect it coming, it’s still a little bit mind-bending and shocking and, of course, awful and tragic for the people who’ve lost their jobs. And it’s a significant fraction of the country at this point in time, both in the U.S. and Canada. As you said, tens of millions now in the US — twenty-two millions is the latest number I’ve been able to come across — lost their jobs in the US and Canada is certainly into the millions. In any event, it’s a bit harder to get fresh data there, but nevertheless, it’s a massive hit. Now, let’s recognize, governments have stepped up to the plate here. They have been delivering assistance in various forms. And so it’s very likely that a much larger fraction of those unemployed people are getting assistance of some form, whether it is classic EI in Canada, whether it’s a enhanced form, whether it’s some of these other measures that have been put in place. Certainly still, though, there are holes out there and people who aren’t getting that. And so there’s a lot of suffering going on out there. And as I look and try and sort out just where the end game is here, obviously you risk getting side-tracked into all sorts of other unknowable questions in terms of exactly when economies restart, and this sort of thing. But one of the key things we’ve been working with, and I must say we’re feeling more and more comfortable with is the idea that North American economy is probably seeing a peak to trough decline in economic output of about 20 %. And I mention that just because you might try to map that onto the labour market and say: well, it makes sense then if something like 20 % of workers weren’t working. That’s not quite right. Some people are still working like you or I. Maybe we’re spending a bit less than we did before, just because there are fewer opportunities. Other people aren’t working at all, but maybe they’re spending certainly more than they’re making at this juncture because, of course, there are basic necessities of life. But that might not be a bad guess. And so I can say, as we work through these numbers, it’s already pretty clear we’ve got unemployment rates that are going to be registering 15 %, or something like that, temporarily. Probably goes even a little more. I’m hoping not 20 %, but nevertheless a big number. But again, with those caveats, there’s more help than there usually is at this point. It has been induced by a very artificial shock. It’s a government edict saying don’t go to work, don’t go to stores, and it should be a faster than usual rebound. In fact, I was just debating recessions with fellow economists, and there’s no denying this is one. But in terms of whether it actually fits that traditional two quarters of decline definition, it probably does. But actually, that’s a debate. And indeed, it is a temporary affair. And so these people shouldn’t be unemployed for years. And that, of course, was one of the big problems coming out of the global financial crisis.

Yes. And again, we talk about this because our business is the economy and markets, and being investment managers for millions of Canadians. But you said it so well, we can’t overlook the incredible costs this has to individuals. Each one of these job losses is affecting a family, a couple, an individual. And it really is shocking. Eric, thank you, though, for putting it in perspective today.

Thank you.


Recorded April 16, 2020

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