Working Papers

2020-18 | May 2020


Unemployment Paths in a Pandemic Economy


The COVID-19 pandemic has upended the U.S. economy and labor market. We assess the initial spike in unemployment due to the virus response and possible paths for the official unemployment rate through 2021. Substantial uncertainty surrounds the path for measured unemployment, depending on the path of the virus and containment measures and their impact on reported job search activity. We assess potential unemployment paths based on historical patterns of monthly flows in and out of unemployment, adjusted for unique features of the virus economy. The possible paths vary widely, but absent hiring activity on an unprecedented scale, unemployment could remain in double-digits into 2021. We also find that the increase in measured unemployment could be meaningfully tempered by a substantial reduction in labor force participation.

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Article Citation

Petrosky-Nadeau, Nicolas, and Robert G. Valletta. 2020. "Unemployment Paths in a Pandemic Economy," Federal Reserve Bank of San Francisco Working Paper 2020-18. Available at