OAKLAND, Calif. (KTVU) - Chilling unemployment predictions for the Bay Area—California's strongest economic engine, is headed into record job loss.
Money Geek, a Bay Area start-up that provides consumers with financial information, crunched its forecast models of Bay Area unemployment.
"Our forecast for the Bay Area is that the unemployment rate at its peak, related to coronavirus economic impact will be 27%," said the company's Data Analytics Chief Doug Milnes.
He said the claims already filed, almost brings the unemployment rate to that point.
"That's a little over 20% of the workforce of California has made unemployment claims," said Milnes,
When the stock market crashed in 1929, unemployment was at 3.2%. But, in 1932, the worst of the Great Depression, 24.% were jobless. That slowly decreased until 1940, to 14.6% as war clouds gathered.
Then came Pearl Harbor.
In 1941, when America officially entered the war, unemployment plunged to 9.9%. By war's end in 1945, unemployment reached an all-time low of 1.9%. In 2009, the depth of the Great Recession, unemployment reached 9.9%. Last year it stood at 3.5%; nicknamed the "Goldilocks Economy."
Even at the projected 27%, the numbers would top the Depression.
"I think there could be a huge surge of bankruptcies," said University of Pennsylvania bankruptcy law professor and writer David Skeel. Adding, "There is a remarkable correlation between unemployment claims and bankruptcy filings."
San Francisco-based bankruptcy lawyer Debra Grassgreen said, "We're seeing filings that have been directly related to the COVID-19 pandemic. You know, companies that are having supply chain issues. So we're seeing actual filings pick up but we're also seeing a big uptick in calls from new clients existing clients, prior clients."
Since most people work for small businesses, that could permanently cost lots of jobs.
"For small and medium-sized businesses, sadly, the vast majority are liquidations. Over two-thirds of them shutdown," said Skeel.
The slower the government acts in protecting virtually all small businesses, the more financial bloodshed.
"It could be a big problem and it could significantly slow the recovery," said Skeel.