20 Years of Employment Gains Have Vanished
Let's explore a couple of Tweets with possible answers.
Unwind 20 Years of Job Creation
Bloomberg estimates an unemployment rate of 20%.
Based on 30 million recent claims, I estimated an unemployment rate of 21%.
Initial Unemployment Claims
For details please see Upcoming Jobs Report: What Will the Unemployment Rate Be?
If we subtract 30 million jobs as I did in the lead chart, the employment level would be the similar to that in 1997.
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Bloomberg estimates 1999.
Five Caveats
- Just because people filed and unemployment claim does not mean they qualify according to BLS Household Survey guidelines.
- The reverse also holds true. People may qualify for unemployment without filing. Gig workers in particular fall into this category.
- Household Survey uncertainties: See The BLS FAQ on the Impact of the Coronavirus Pandemic on the Employment Situation for March 2020
- In the Household Survey if you work as little as 1 hour you are not unemployed.
- The Covid-19 Relief Act may impact claims but not the survey.
An employment level somewhere between 1997 and 2000 is a likely range.
My numbers are for the Employment Level (from the household survey), not the Nonfarm Jobs total which is the establishment survey.
Deflation Coming - Blame the Fed
The decline in employment is a very deflationary event from both a price standpoint and a credit destruction standpoint.
For discussion, please see The Problem is Not Deflation, It's Attempts to Prevent It
Mish