MICHEL MARTIN, HOST:

We're going to begin this hour discussing the shocking unemployment numbers that came out yesterday. The Department of Labor reported that the U.S. unemployment rate ballooned to 14.7%. That's because more than 20 million jobs were lost in the month of April alone. Together, these numbers paint a grim picture of the impact of the coronavirus pandemic and efforts to control it on the U.S. economy.

In a few minutes, we'll hear about why the majority of jobs lost in the past few weeks were held by women. But first, we want to spend some time looking at what seems to be a disconnect in two key economic figures - unemployment and the stock market. We know that unemployment has reached a level not seen since the Depression. But the stock market, while having its ups and downs, is doing fine.

To help us make sense of that, we've called Paul Krugman. He's a Nobel Prize-winning economist and New York Times columnist. His latest book is "Arguing With Zombies: Economics, Politics, And The Fight For A Better Future." And he's with us now via Skype.

Mr. Krugman, welcome. Thank you so much for talking with us.

PAUL KRUGMAN: Great to talk to you.

MARTIN: How do you react to yesterday's unemployment numbers?

KRUGMAN: It was fully expected. And we've had enough straws in the wind and other sources. In fact, almost everybody I talked to is pretty certain that the official numbers - not through any fault of the Bureau of Labor Statistics, but just because suddenly the times we're living in - understate. It was probably substantially more than 20 million jobs lost, and the true unemployment rate is probably closer to 20%.

MARTIN: Yesterday, you tweeted, quote, "for those baffled by the stock market, a fairly recent historical tidbit - stocks had recovered to their 2007 peak by late 2012, but unemployment was still 8%. Stocks are not a good predictor of the labor market." Could you talk a little bit more about that?

KRUGMAN: Yeah. Now, the thing to remember, first of all, is that stocks are a claim on future profits. It's not about wages. And so things that are good for stocks can actually be bad for workers. And more than that - when you're looking at stocks, remember that people are buying stocks as opposed to something else.

So that - if you ask, why did the stock market recover fully by 2012 despite the fact that the economy was nowhere close to being recovered, the big answer was that the alternatives had gotten worse. Interest rates were way down. Buying bonds was a much worse proposition that it had been. And that's true in extremis right now.

So if you say, well, how can stocks be doing as well as they are despite the horrible economy, you should bear in mind that, you know, long-term U.S. government bonds are yielding only a third as much as they were yielding at the beginning of the year. So that's a fairly good reason to buy stocks - just because there's no alternative.

MARTIN: Since you've established that the stock market is not the economy, what are you looking at? What should we be looking at?

KRUGMAN: Well, first of all, I'm looking at the epidemiology. Right now, the United States is plateauing in terms of the virus. We're not bringing it under control. So that's a big restraint. And, you know, even if states say, all clear, everybody go out, will people believe them? Will people actually go back to spending as before? And at least from what we can see so far, the answer is probably no.

The other things is, we've provided a lot, though not enough aid, to help people through this period. But that stuff is going to fade out. The extra unemployment benefits are only for four months. Some of the payroll lending is only for eight weeks. And we have provided minimal aid to state and local governments which, unlike the feds, are required to balance their budgets.

So if you look forward towards late summer, we're going to be in a situation where a lot of the support that we've provided is starting to fade out, where state and local governments, which have already laid off almost a million people, are going to be laying off more people. And a lot of people are going to be in even worse financial hardship than they are now. That's going to put the brakes on any recovery.

MARTIN: That's Paul Krugman, Nobel laureate, New York Times columnist and distinguished professor at the City University of New York Graduate Center. His latest book, "Arguing With Zombies," is out now, and he was with us via Skype.

Mr. Krugman, thanks so much for talking with us. I hope we'll talk again.

KRUGMAN: I hope so, too. Thanks. Transcript provided by NPR, Copyright NPR.