Disastrous Continued Claims
Initial claims rose by 1.48 million but continued claims at 19.52 million tell the real story.
Continued Claims Historical Perspective
Initial Claims
Not a Leading Indicator
Initial claims are touted as a “leading indicator”.
They aren’t much of one if indeed anything at all.
The Myth of the V-Shaped Recovery in One Chart
In case you missed it, please see The Myth of the V-Shaped Recovery in One Chart.
Life Support
20 million people out of work for 8 straight weeks tells the real story:
This economy is on life support of $600 monthly Federal unemployment insurance due to run out this month.
IMF Assessment
Even the perennially late IMF is beginning to catch on.
It’s a Crisis Like No Other: IMF Downgrades US GDP to -8.0%
Mish
Should have never shut anything down. No worse than the flu for most people. Do nothing: 2 million die; shut down economy: everyone dies. Life is full of risks and this irrational overreaction to C-19 will lead us to the Greatest Depression ever that will kill more than the silly virus.
If we stop counting initial and continuing claims, the numbers would look much better. Zero even!
Don’t worry, the stock market will survive.
to be honest, I really thought that the CoronaVirus would magically disappear in April.
I’ve been repeating this and I stand by it to this minute. There will be no more shutdowns, and the first was a horrible economic mistake. It’s our immune systems job to fight this, not the Government. Do not expect any more shutdowns as the mental health toll is worse than the virus.
So why are every other industrialized countries able to fight it successfully?
You’re crazy if you don’t think Blue states will shut down again this fall before the election.
States which have required masks have rapidly declining cases. They will have no need to shut down. They will have business as usual by Fall, unless they eliminate the mask requirement.
TX is already shutting down.
Oops.
Politicians must do something! <– That’s the problem. The very sky would come crashing down if an elected official wasn’t needed.
…Edward I. Altman, the creator of the Z score, a widely used method of predicting business failures, estimated that this year will easily set a record for so-called mega bankruptcies — filings by companies with $1 billion or more in debt. And he expects the number of merely large bankruptcies — at least $100 million — to challenge the record set the year after the 2008 economic crisis.
Even a meaningful rebound in economic activity over the coming months won’t stop it, said Mr. Altman, the Max L. Heine professor of finance, emeritus, at New York University’s Stern School of Business. “The really hurting companies are too far gone to be saved,” he said….
….Mr. Altman expects at least 66 cases with more than $1 billion in debt this year, eclipsing 2009’s mark of 49. He also predicted 192 bankruptcies involving at least $100 million in debt, which would trail only 2009’s record of 242
Robert J. Keach, a director of the American College of Bankruptcy, said many companies had so far managed to put off bankruptcy by amassing cash and conserving it as best they can: drawing down existing credit lines, furloughing workers, delaying projects and taking advantage of federal and state pandemic-relief programs.
But when those programs expire, the companies will start burning through their cash. That’s when bankruptcy filings are likely to soar and stay elevated, Mr. Keach said.
Expect “a Covid-19 cliff” in the next 30 to 60 days, he said.
Companies that received loans under the federal Paycheck Protection Program may be waiting to file, said Mr. Keach, who practices bankruptcy law with the firm of Bernstein Shur in Portland, Maine. The loans can be converted to grants if the companies meet certain requirements, and if the borrowers can put off bankruptcy until they’re sure they won’t have to pay the money back, they will have more cash when they file.
have a link to that?
Don’t worry, Trump’s gonna cut funding soon so that people can not:
It’s gonna be like his approach to testing. If it’s not looking good, just cut funding.
Mish – Why are you leaving out the 728K PUA initial claims? And the 11M continuing PUA claims?
Good point.
“The total number of people claiming benefits in all programs for the week ending June 6 was 30,553,817, an increase of 1,294,309 from the previous week. There were 1,546,208 persons claiming benefits in all programs in the comparable week in 2019.”
How does one accurately factor those in?
Reduced hours qualify and I do not have current numbers.
But yes – good point
I will see if I can get current numbers
“20 million people out of work for 8 straight weeks tells the real story:
This economy is on life support of $600 monthly Federal unemployment insurance due to run out this month.”
…
Not just the $600. PPP for many about to end. I know they extended it to 24 weeks, but that was near the end of 8 weeks for most borrowers so likely much of loot already spent. And the variety of moratoriums / forbearances ending soon. What makes many of these doubly bad is lender many cases want lump sum or payback plan over short term.
People who missed 3 straight mortgage payments have ability to pay it all back with 4th month payment??
There are many other pitfalls besides the $600 per week unemployment supplement coming to an end on July 25th. How many businesses are paying their employees with PPP grants that otherwise would be laying off those same employees if they had to pay wages out-of-pocket? Or the airlines who can’t make significant layoffs until October due to the terms of their bailout? My guess is these stimulus programs will be extended until at least after the election in one form or another, masking the true gravity of the unemployment situation.
Any company that complied with the original PPP instructions used up their money over an 8 week period, and they are out of money now. Others now have 24 weeks to use 8 weeks of pay, and no incentive to hire people back until the final week (after which they can be let go again). It’s very difficult to guess what impact this mess will have.
Isn’t big government wonderful!
I’m SHOCKED that politicians would try to buy votes with taxpayer money. (sarc)