Continuing unemployment claims lag initial claims by a week, but the former provides a better look at what is happening now.
For 7 consecutive weeks, continued unemployment claims have topped the 20 million mark.
Historical Perspective
Continuing claims only topped the 5 million mark in the depths of the Great Recession.
They have now topped the 5 million mark for 11 consecutive weeks, and the 20 million mark for 7 weeks.
Initial Claims
Initial Claims Not a Leading Indicator
Initial claims are normally considered a leading indicator. In this case, they certainly aren’t.
The huge surge in initial unemployment claims is the past. Continuing claims tell the present.
Initial claims peaked at 6.867 million 11 weeks ago, They have fallen to 1.508 million but continued claims are barely dropping.
For discussion of initial claims, please see Unemployment Claims Dip But Remain Stubbornly High
The importants fact is continued unemployment claims have topped the 20 million mark for nearly two months.
V-Shaped Nonsense
Any notion that 20 million people will soon return to work at the same number of hours as before is nonsense.
Retail Sales
Earlier today I reported Retail Sales Surge Most on Record But Number is Misleading.
- Retail sales surged a greater than expected 17.7% in May but the numbers are still well below the pre-pandemic levels.
- Despite the surge, sales numbers are back to levels seen in late 2015 and early 2016.
People got money and spent it, but they also skipped mortgage payments and credit card payments.
What happens when the checks run out?
Manufacturing Tells the Same Story as Claims
The Fed’s Industrial Production and Capacity Utilization puts a big negative spotlight on the emerging V-shaped recovery thesis.
The Myth of the V-Shaped Recovery in One Chart
For discussion, please see The Myth of the V-Shaped Recovery in One Chart.
Housing Recovery Not Much to Crow About
Finally please note Housing Recovery Not Much to Crow About
Housing starts are near 6-year lows and less than January 1959 levels.
So retail sales present one picture, but manufacturing, industrial production, housing starts, and continuing claims over 20 million tell another.
Mish
The size and pace of Fed balance sheet expansion have put a floor under global equity markets and driven equities higher. Yet Powell is going out of his way to signal that more economic support is on the way. The problem with market manipulation is that once it starts, where does it end?
This has forced even the most bearish of us to finally concede that, for whatever reason you want to claim, the Fed under the leadership of its Chairman J. Powell has crossed the Rubicon and the point of no return. More on this subject in the article below.
Sounds like a great time to start a business. Too bad no one in charge wants that to happen. Better to continue propping up existing businesses, even when they’ve failed.
It would be very difficult to start a business in this environment, at least until the end of July. With people earning a bonus $600/week unemployment, you would not get many job applicants.
Yes! This is a great time to start a business. Agreed. We are already business owners in Canada. We expect to have two more started this year……. service service service.
This is like watching a train coming down a tunnel. You can see the light but the danger is still off in the distance.
Manufacturing is what will end this depression.
Manufacturing creates very little employment. The “lights out” factory will be reality sooner rather than later, and automation in heavy manufacturing has eradicated most paid positions.
In 1955, American Motors needed 25,000 employees at its Los Angeles factory to produce around 40,000 Hudson Hornets a year. That’s a rate of 0.62 jobs per car produced.
To create a million jobs with 1950s automotive manufacturing, just in the assembly plant, you’d need to sell just 1.6 million additional cars, or about half of what modern FCA (which American Motors was folded into along with Chrysler) produces.
In 2020, Chrysler employs around 3,400 employees at its Toluca plant to produce about 250,000 cars. That’s a mere 0.0136 jobs per car, meaning you’d need to sell over 73.5 million new cars to create a million new assembly jobs.
That’s almost as many cars as were sold worldwide by every single automaker that existed in 2019.
With lights-out automated manufacturing, a plant will need perhaps a dozen employees to maintain assembly robots (including a plant manager), and perhaps a handful of janitors and groundskeepers. And that’s coming sooner rather than later, and to the most expensive labor markets (like Europe and North America) first.
Recently in Colorado a man was convicted of the murder of his girlfriend on nothing but circumstantial evidence, no body, no witnesses, nothing but the obvious. Given the obvious, the Chinese were doing gain of function on bat viruses, like human to human transmission. It leaked out and the world is compromised. Circumstantial, but obvious. Is 6 feet apart proved, or is it obvious? I don’t think either.
According to President Trump today, the recovery is better than “V-shape.” It is more of an “I-shape” (vertically straight up).
I will say one thing about the President; no superlative is big enough for him. He consistently needs to turn the knob to “11.”
Golly, how did everyone lose their jobs?
I think they weren’t where they left them. Someone should look into this, a few jobs going missing is one thing, but millions all at once makes me suspicious.
So many of these “jobs” were of low quality and low pay, not paying a living wage, that unemployment payments (when coupled with federal emergency stimulus) INCREASED average wages for tens of millions.
Large swathes of the American “economy” are a giant illusion. COVID simply poked the colorfully-painted veneer to expose the termite-riddled dry-rot underneath.
In a permanently collapsed economy with what is basically full unemployment for well over a decade,no real private sector left just govt,2 things will happen, one like all bankrupt 3rd world banana republics the US will collapse in civil war starting with a TeT style offensive to overthrow the corrupt DC junta or martial law!
One can always hope……
It is too bad that the billionaires that the fed is pumping money to can’t spend it fast enough
They’re waiting for the filthy poors to lose their assets, so they can buy them up cheap.
Kudlow will say that this thing is bullish!!!