MUNCIE, Indiana – Extreme social distancing occurring in the United States is more than sufficient to create a recession as mass layoffs cause unemployment to exceed 10.5 percent nationally, says a new report from Ball State University.

Within 90 days, the economic downturn caused by governmental efforts to mitigate the novel coronavirus will cause unemployment to rise to 14.6 percent nationally .

This could cost the U.S. economy about $7 trillion, said Michael Hicks, a Ball State economist and co-author of the study.

The co-authors of “What Will the Next Three Months Look Like? Simulating the Impact of Social Distancing on GDP and Employment” by Ball State’s Center for Business and Economic Research (CBER) says the picture could be worse.

“These are likely very conservative estimates, yet it argues that job losses in March, April, May and June may be the four largest in US history, topping the 1.9 million jobs lost in the weeks following V-J Day in September 1945,” Hicks said “This level of job losses does not consider the effect of school closures on labor supply by households. This study does not assess the impact of supply chain disruptions on manufacturing, nor does it include the extreme shock to household wealth caused by stock market declines.”

CBER’s analysis finds the effect of a 45-day social distancing will reduce GDP significantly, and cause relatively large job losses of nearly  10.6 million, nationally. After 90 days of social distancing, researchers anticipate the unemployment rate to spike nationally to 14.6 percent.

“Moreover, this estimate extends only 90 days, and does not include much broader impacts of longer social distancing,” he said. “State policies which speed resources to displaced workers are needed. Policies such as workshare, and relief from job search, job tenure and earnings requirements are urgently required.”

Hicks also pointed out that state and federal policies which encourage extensions to borrowing terms should be broadly encouraged.

“This should extend to both small businesses and households,” he said.  “Federal policies which supplement income for all residents are required. Universal Basic Income payments, with a fixed duration would provide economic stabilization, while minimizing labor market supply effects.

“Beyond stabilization efforts, state and federal governments should prepare for longer duration impacts. Schools across much of the nation are unprepared for lengthy closure. Efforts to expand broadband connectivity and fund technological options for schools should be part of a broader stimulus bill.”