WILL REAL GDP DIP BY DOUBLE DIGITS?

In 1962, an American economist from Yale University, Arthur Okun--who went on to serve as chairman of the Council of Economic Advisers during the LBJ Administration--did an empirical study to show there was a negative short-run relationship between the unemployment rate and real gross domestic product, points out Tenpao Lee, professor of economics at Niagara University, Lewiston, N.Y

"Many studies subsequently confirmed Okun's findings and referred to the phenomenon as Okun's Law, which became a staple in many macroeconomics textbooks. Specifically, Okun's Law states that an increase of a country's unemployment rate of one percent will cause its GDP to dip two percent.

"With COVID-19, the unemployment rate has escalated from 4.4% in early March to approximately 16% in mid April. It will likely remain at the high level at least through the second quarter of this year.

"If so, based on Okun's Law, the real GDP will dip by 23.6% during the second quarter. If, as some experts believe, the unemployment rate is actually higher...