Unemployment driven by the coronavirus shutdowns will be worse than during the Great Recession of a decade ago, economists say. Some 18 million Americans who want to work will likely be out of a job by summer, triple last winter’s unemployment.

That’s one in nine U.S. workers, compared to one in 10 during the last financial crisis, according to the national spending scholars who run the Penn Wharton Budget Model program at the University of Pennsylvania.

The U.S. economy will shrink at a rate of 30% a year during the worst of the slowdown, the second quarter, which ends June 30, according to the report by analysts Alexander Arnon, Zheli He, and Jon Huntley.

And it could have been even worse — with unemployment rising to 12% and growth at an annualized minus 37% — without the newly enacted $2.2 trillion coronavirus economic rescue package.

That rescue bill, passed after vivid but brief partisan bickering by Congress and signed by President Donald Trump late last month, gives $560 billion to Americans through per-person grants and increased unemployment compensation; lends $500 billion to big corporations; provides $349 billion in “forgivable” loans to small businesses that keep paying workers; and grants more to hospitals, states, and towns.

Members of Congress are already arguing over additional aid, such as another $250 billion in forgivable loans, and a larger program that could upgrade aging roads, bridges, ports, and airports — assuming the government can keep borrowing trillions of dollars from investors in U.S. Treasury debt at the current low interest rates.

The business aid is supposed to avoid layoffs. The Penn Wharton Budget Model estimates the rescue package will save only about 1.5 million of the country’s 160 million private-sector jobs, which would otherwise vanish by September. (The projected jump from 4% unemployment to 11% implies more than 10 million jobs are going away, even with federal aid, as restaurants, shops, specialty medical practices, and other employers shut.)

The budget model analysts based their review on their own short-term model of the effect of large-scale spending, plus the “fiscal multipliers” of government spending the Congressional Budget Office used to measure the impact of the 2009 American Reinvestment and Recovery Act passed under President Barack Obama. That was a more modest attempt to jump start the economy.

The analysts noted that lower-income people and the newly unemployed tend to spend government aid rapidly, boosting the economy quickly. Wealthier people and institutions, by contrast, tend to hoard money at a time when few productive investments are being made, so their tax breaks and other benefits do not go as far toward boosting the economy.

But some of the most efficient government spending in today’s environment, in terms of its impact on the economy, is “direct government spending on goods and services, focused primarily on infrastructure and health care,” since hospitals and states “will quickly spend the money.”

The Wharton team said few businesses are likely to invest their loans or grants by expanding so long as their customers and employees are under orders to stay at home. But by helping some slow businesses stay open at all, they will help keep the economy afloat.

Given those assumptions, the report estimates:

  • The $600 a week unemployment “enhancement” program, which costs taxpayers $260 billion, will boost net gross domestic product by $111 billion by next year.
  • The one-time $1,200 payment per adult (plus $500 per child) for middle- and low-income families will cost $290 billion and increase GDP by $123 billion by next year.
  • The $42 billion boost to SNAP (food stamp) benefits will add $18 billion to GDP.
  • The $350 billion in “forgivable” Paycheck Protection Program loans, plus another $16 billion in small-business aid, will boost GDP by $132 billion.
  • The $72 billion for state transportation system grants will likely boost GDP by $38 billion.
  • Another $150 billion marked for state and local governments stricken by coronavirus-related losses will likely boost GDP by $105 billion.

  • Some $32 billion set aside for schools and student aid will likely boost GDP by $20 billion.
  • Another $20 billion in retirement-plan early withdrawal and minimum-distribution tax breaks, mostly enjoyed by “higher-income” people, will likely grow the GDP by only $3 billion.
  • The $280 billion in tax breaks for businesses that keep employees on even when they’re losing money and for firms suffering from reductions in cash flow will boost GDP by $68 billion.
  • The $500 billion big-business loan program was considered so tough to analyze — since companies’ need for the program is so uncertain — that Wharton didn’t make an estimate of its economic impact.

That works out to a GDP return of more $800 billion, on the government’s investment of more than $2 trillion. There are other benefits the group says are not captured by its analysis. For example, it will keep many hospitals from failing, and help keep many people off public support or from becoming homeless and eventually needing much more expensive medical aid.