As a record number of Americans apply for unemployment benefits amid business closures intended to slow the spread of the novel coronavirus, the head of Boston’s Federal Reserve Bank said Massachusetts will likely face even higher spikes in joblessness than other parts of the country.
“We’re going to be hit initially, I think, pretty hard,” Eric Rosengren, the President and CEO of the Federal Reserve Bank of Boston told Jim Braude on WGBH News’ Greater Boston Thursday.
“It’s partly because … we started [imposing restrictions] sooner. Also, Boston is a city that has a thriving tourist trade. Something like tourism’s not going to come back very quickly,” he said. “We have lots of hotels, we have lots of restaurants. All those industries are being significantly affected by the pandemic.”
More than 6 million people filed for unemployment in the U.S. last week, the highest weekly total in history, according to the latest data from the Department of Labor. In Massachusetts alone, more than 181,000 claims were filed.
But Rosengren said despite early losses, the state’s restrictions — which include a statewide stay-at-home advisory and physical closures for all non-essential businesses — are better for the economy in the long run.
“Cities and states that react strongly to this are more likely to recovery strongly when we get out of this,” he said. “If people aren’t comfortable taking mass transit, if they’re not comfortable getting on buses and subways and trains, then you’re not going to have businesses open up. So, it’s critically important that we solve the public health problem to solve the economic problem.”
Rosengren said that will take more than just reducing the number of new cases.
“It’s not just a numbers game,” he said. “It also requires us to no longer have the disease being transferred throughout the community. That requires being able to test people and getting back to a situation where there are few enough cases that we can trace individuals who do become infected.”
An economic recovery in Massachusetts depends on the actions of other states, too, Rosengren added.
“The pandemic … is playing out differently in different parts of the country. To really be confident that people are not infected, you’re going to need the whole country to be in a better shape, not just Massachusetts,” he said. “It’s important that every part of the country adopts what’s necessary.”
Rosengren says it’s hard to predict what the state of the economy will look like when the crisis is over.
“Until we get the disease under control, it’s very hard to guess what the results are going to be for the economy,” he said. “I’m relatively optimistic over time we’ll solve this. I think it’s gonna be a difficult quarter or two.”