Unemployment Paths in a Pandemic Economy

The COVID-19 pandemic upended the U.S. economy and labor market. We explore potential paths for the official unemployment rate through 2021. Our analyses rely on historical patterns of monthly flows in and out of unemployment, adjusted for unique features of the virus economy. The possible unemployment trajectories vary widely, but absent sustained hiring activity on an unprecedented scale, unemployment could remain substantially elevated into 2021. After adjusting the unemployment rate for unique measurement challenges created by virus containment measures, we find that unemployment has followed a fast recovery track during the first six months of the pandemic.