The ADP National Employment Report provides the strongest clue yet for the pending disastrous BLS jobs report on Friday.
Private sector employment decreased by 20,236,000 jobs from March
to April according to the April ADP National Employment Report®. The report utilizes data through the 12th of the month. The NER uses the same time period the Bureau of Labor and Statistics uses for their survey. As such, the April NER does not reflect the full impact of COVID-19 on the overall employment situation.
Unprecedented Job Losses
“Job losses of this scale are unprecedented. The total number of job losses for the month of April alone was more than double the total jobs lost during the Great Recession,” said Ahu Yildirmaz, co-head of the ADP Research Institute. “Additionally, it is important to note that the report is based on the total number of payroll records for employees who were active on a company’s payroll through the 12th of the month. This is the same time period the Bureau of Labor and Statistics uses for their survey.”
Job Losses by Company Size
Job Losses By Sector
Initial Unemployment Claims
In the last 6 week there have been 30 million initial unemployment claims.
20 Years of Employment Gains Have Vanished
Based on the 30 million claims, I commented 20 Years of Employment Gains Have Vanished.
If we assume only 20 million jobs were lost, that would roughly takes us back fo January 2000 or so.
But those are “Private Jobs”. They are a subset of “All Employees Total Nonfarm” which in turn is a subset of “Employment Level”.
Unemployment Rate
Yesterday, the Chicago Fed addressed the question Is the Unemployment Rate a Good Measure of People Currently Out of Work?
The Chicago Fed projected a baseline unemployment rate of 9.4% with a U-6 rate of 18.9% and a COV-Underutilization Rate of 29%. The Cov rate is essentially the U-6 rate except that it makes additions for Cov-impacted workers.
Recall that if people did not look for work, they are not unemployed. But furloughed people (temporary layoffs), don’t have to look.
Upcoming Jobs Report: What Will the Unemployment Rate Be?
On April 30, and based on the 30 million claims, I asked Upcoming Jobs Report: What Will the Unemployment Rate Be?
Here is my formula
Unemployment Rate = (New Claims + Existing Unemployed + Estimate of Claims to Come) / Labor Force
OverCounts
But I also allowed for overcounts, that is people who made an unemployment claim but will not be considered by the BLS as unemployed. Recall that if you worked as little as 1 hour, you are considered “employed”.
Furthermore, I made the assumption that there were no new claims coming, making the formula: Unemployment Rate = (New Claims + Existing Unemployed – Estimate of overcounts) / Labor Force
Assume a “Net” Overcount of 8 Million
30.303 million New Claims + 7.140 million Existing Unemployed – 8.000 million Overcounts / 162.913 Labor Force = 18.1%
Assume a “Net” Undercount of 2 Million
30.303 million + 7.140 million + 2.000 million / 162.913 = 24.2%
To pick a specific number, I will go with 21% assuming a net overcount of 4.0 million vs the Household Survey (yielding 20.5%) + another 0.5 percentage points representing a change in the Labor Force.
Mish vs Chicago Fed vs Bloomberg
My Unemployment rate projection is 21% vs the Chicago Fed baseline of 9.4%
For comparison purposes, Bloomberg estimated 20%.
For details and BLS caveats, please see 20 Years of Employment Gains Have Vanished.
Mish
Coronavirus survivors banned from joining the military https://www.militarytimes.com/news/your-military/2020/05/06/coronavirus-survivors-banned-from-joining-the-military/
This is significant and devastating. What if you are infected with COVID during your training or shortly thereafter? Are you not able to graduate from basic training? Are you kicked out of the military?
Don’t worry folks, after 6 months these 20 million people will not be considered part of the labor force anymore and the unemployment rate will drop back to 4%
All the more reason to get those bridges fixed once and for all since we will have 20 to 30 million people living under them.
quite the optimist you are.
be honest, you work for the goverment, don’t you.
After a couple days (hours)BLS counts them as out of the labor force so we could see a zero unemployment “rate” or maybe even a negative unemployment….”rate”MAGA bitches lol!
The amazing statistic was “Large” companies with 500 to 999 employees laid off the fewest people. The follow-up question is, “How proportional were the layoffs?”
Good Question
Coming Up
The sad thing is the unemployment bonus is actually going to make unemployment worse latter in the year and next year.
People currently making more being unemployed than they made working will want to milk their windfall as long as possible. This is going to create a shortage of labor for already struggling businesses trying to re-open, that cannot compete with UI for wages. The result will be more business closings and by the time many of those on UI now return to the job market, many fewer jobs will exist for them to return to.
It will also prompt big business to make the investment to automate wherever it is economical to do so.
The worst thing you ever want to hear is the government saying they are going to help you……. You can be sure it will be a disaster.
Not only that but they do take out withholding from UI checks yet it is taxable so next year they will find a tax bill many cannot pay.
This is not all bad news. I feel we could easily lose 5 to 7 million illegal immigrants. As they have lost their jobs and do not qualify for unemployment. Also the charities are losing funding and food banks will close. Look for this an the airbnb fiasco to kill housing as millions of homes sit empty.
All this will help the working poor here as they take the jobs that have been going to illegal aliens. Also the H1B Visa program needs to be shut till further notice.
To everyone who thinks this is racist it is not. My first wife is from Mexico and my second from Argentina. They are just legal highly educated women who did immigration properly. Prior to me meeting them.
If anyone in the US who is not Native American and is anti-immigrant, they’re a bit shortsighted as everyone (not native) is the descendant of an immigration. Both of my grandfathers (in Minnesota) did not even speak English until they went to first grade (one spoke German, the other Swedish). All three of my sons have married foreign wives, one from China, one from Japan, and one from Texas.
But to support your point, Sequoia, there is a huge difference between illegal immigration and legal immigration. I hope all the illegals go home.
I would like to point out that so called native Americans are also immigrants from Asia, arriving about 13,000 years ago.
This
Yes, Herkie, you are correct. But I was specifically thinking of the US of A.
Darn. What a great reply. !00% accurate.
Spot on. I am an immigrant myself and have been saying the H1B visa (along with L1 and others) needs to stopped completely. There will be plenty of qualified professionals available after this downturn in employment.
Even Kevin Hassett at the White House said unemployment could be north of 15% and as high as 20%. But this will likely be a backward looking number in a couple of weeks as many states open for business.
Yes so they can STAY working poor.
“All this will help the working poor here as they take the jobs that have been going to illegal aliens.” Probably not as much as you think. There are so many “safety nets”, that for some (many?), the consequences of being unemployed aren’t severe enough to force them to take work that’s unpleasant or perceived as beneath them.
So some initial digestion of this bombshell study…
We probably now have to redo nearly all the vaccine designs and serology assays.
But it gets worse. The immune system is mostly recognizing viral proteins involved after replication meaning they won’t neutralize the virus.
That’s sickening! Sorry….
On a serious note, this is frustrating news. A vaccine is the answer. I’m old enough to remember the last few years when polio was still a scare — there was a vaccine, but for what ever reason people still contracted the disease. Perhaps vaccines are always a work in progress. I get my flu shot every year, but people with the shot still get the flu.
Every one of the talking heads is trying to but lipstick on the pig. The St Louis FRB president of full of shit. It will be impossible to open much of the economy without increasing the infection rate. At 25000 new cases per day, that’s 10,000 days to herd immunity. Triple that (and hence the death rate) and we can bring it down to 3300 days or about 11 years without a treatment or vaccine. With a vaccine we can start to normalize in Q1 orQ2 next year. What will be left of the economy by then? Unemployment is still working is way back through the supply chain. WTF (W = who) is he kidding? Sweden has it right
I agree. There will be a second wave, and probably a third. A vaccine would be great, but easier said than done and the coronavirus might be a moving target. I’m still not sure about Sweden, but they will probably avoid a severe second wave. Mooo (herd immunity).
Sweden has it right … if it’s goal was to record its highest weekly mortality since the turn of the century … if its goal was to have more COVID-19 deaths within a few months in 2020 than flu deaths in any complete flu season since the 1918 pandemic.
S–So W–What, E–Everyone D–Dies, E–Especially N–Now!
S–W–E–D–E–N–! Goooo Sweden!
Sweden didn’t trash their economy, so they are in a better position going forward.
All the extra people they have killed are in a much poorer position going forward … as are their families.
Sweden’s economy is in trouble too, and they have way more deaths relative to population compared to other Scandinavian nations.
There is no evidence of HERD immunity any where in the world, as of now. At most transient and even they can re-infected!
Covid-19 is close cousin of SARS. Has there been vaccine for SARS since 2012?
Each fall/winter, the elderly get Flu vaccine for the ‘strain’ affecting the population LAST year! There are so many kinds of corona viruses in common cold flu spectrum!
Apparently at least 33 strains of Covid-19, with varying degree of infectiousness, virulency, virus load and varied responses of the host (infected) depending upon their genes!
The strain in the east Coast is the virulent and most infectious, camme from Europe(Italy?) and the one west coast, a lot less virulent from Wuhan!
Wishful thinking is unlimited!
So, do we commit economic suicide to delay C19 deaths by a few months? It will pass through the population no matter what. There is no good answer to this. If the body produces no immunity from a full-on infection, how likely is a virus. I don’t know the answer to this, but if the predictions of a vaccine by the new year are as well founded as the no deaths by May 16 model, we’re doomed.
I believe the virus must be stopped. A massive effort of testing and tracing but less expensive than the half measure of endlessly waiting for a vaccine while counting the dead.
And ofcourse it could have been done at so little cost in January.
So glad housing not dependent on jobs … oh, wait …
Yields spiking this week + from MBA on mortgages:
Total loans in forbearance grew relative to the prior week from 6.99% to 7.54%. In comparison, only 0.25% of all loans were in forbearance for the week of March 2.
…
Think you can tap home equity to get over rough patch? Think again.
MBA:
“Mortgage application volume was unchanged last week, even as the 30-year fixed rate mortgage declined to 3.40 percent – a new record in MBA’s survey,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Despite lower rates, refinance applications dropped, as many lenders are offering higher rates for refinances than for purchase loans, and others are suspending the availability of cash-out refinance loans because of their inability to sell them to Fannie Mae and Freddie Mac.”
But but but, lower inventory will put pressure on home prices to stay up… /sarc
There has never been a better time to buy a house! (Just as a realtor)
Lowest rates ever. Lowest application approvals ever.
What? Me Worry?
Nah.
St Louis FRB president Bullard today on cnbc:
He expects the third quarter to be a “transition quarter,” he said, but that the US will return relatively quickly to growth and by the end of the year will be “finishing up this process.” The unemployment rate, which is expected to jump above 10% in April, could fall back below double digits by the end of the year, Bullard said.
That $1200 everyone gets made all the difference! /sarc
“We’ll all be home by Christmas!” — said every soldier marching off to war
His BS is good enough to qualify for spokes-liar work at the Nat’l Ass’n of Realtors.
bartender, give me one of whatever he’s drinking!
Dow 400K
Nasdaq 100K
We will see companies with EPS reaching 1 million and above. “At least they have a positive earning!!!!”
Utterly amazing and difficult to get my head around. The ramifications will take months or years to play out. History being made.
Yes, 30 million unemployment claims with at least 20 million jobs GONE, and those are both undercounts because states are rejecting vast numbers of applicants, or going so slow they have weeks of applications yet to process.
And I have yet to see anyone talk about the knock on effects of all that lost business. This is going to be FAR more serious, deeper and longer than any predictions I have yet seen and could work out okay, or COULD be worse than the great depression.
And this virus is just getting cranked up.