Earlier today I commented ADP Reports 20 Million Jobs Lost: A Disaster Comparison Three Ways
This is a followup on losses and percentage losses by corporation size.
Nonfarm Private Payrolls March 2020
Nonfarm Private Payrolls April 2020
Change in Nonfarm Payrolls by Company Size
Synopsis
- Workers at the largest companies got hit the least (13.36%).
- Small firms, especially those with 20-49 employees got hit the hardest (21.47%)
The largest firms were the best equipped to offer work at home.
Also, some large firms like Walmart, Amazon, Kroger, Safeway, and all the food stores were designated critical businesses and stayed open.
Number of Small Businesses
In 2018 the SBA reports there were 30.2 million small businesses with 58.9 million employees.
Millions of small businesses will go bankrupt over this.
Inflation or Deflation?
If you believe all this printing will soon result in inflation, you are mistaken.
For discussion, please see Inflation or Deflation? Collapse in Demand Trumps Supply Shocks
Amusingly, Hyperinflationists Come Out of the Woodwork Again.
Understanding the Problem
The Fed’s seriously misguided efforts to force inflation into a system begging for deflation is the problem.
The Problem is Not Deflation, It’s Attempts to Prevent It
Mish
Is the Unemployment Rate a Good Measure of People Currently Out of Work?
May 5, 2020
By Jason Faberman, Aastha Rajan
Summary
We know that tens of millions of people are currently out of work in the United States. More than 26 million workers filed for unemployment benefits between mid-March and mid-April alone. The most popular measure of the strength of the labor market is the unemployment rate. Forecasts for how much it will rise in the coming months vary widely, but many economists now expect an increase to at least 15%, and perhaps much more.
Despite its popularity, the official unemployment rate does not capture all workers facing adverse employment conditions. To count as unemployed, one must be out of work and either on temporary layoff or actively looking and available for new work. This leaves out many people who want to work but did not look for work in the period covered by the data, as well as people who may remain employed but at substantially reduced hours.
The Labor Department has alternative, broader measures of labor market underutilization that track these individuals, too, but the unique nature of the downturn caused by the Covid-19 crisis and the subsequent stay-at-home directives has put people out of work in ways that even these alternative measures may miss. For example, the evidence suggests that employment losses are likely in the tens of millions, but many individuals are finding it hard to actively look or be available for work and therefore be classified as unemployed.
We have developed a new measure of labor market underutilization that is tailored to the Covid-19 crisis. Between February and March, the official unemployment rate rose by 0.8 percentage points, from 3.8% to 4.5%, representing an increase of 1.2 million workers.1 But our measure rose by 2.5 percentage points, from 10.4% to 12.9%, representing an increase of about 4.1 million workers. If we project these changes under different scenarios to get an idea of what we might expect for the April employment report, we get unemployment rates ranging from 8.2% to 16.0%, marking an additional rise ranging from 3.7 to 11.5 percentage points in the official unemployment rate. These are staggeringly large increases, but they pale in comparison to the projected increases in our new measure of between 12.2 and 21.7 percentage points. We project our new measure will rise to between 25.1% and 34.6%.
Here’s a site that has been around for some time to monitor job cuts:
Mish, how much do you think gold will deflate? Currently GLD (SPDR gold trust) trades a $159. Should this drop 5%, 10% or more?
In a previous post you mentioned the problem is Not deflation, but the attempts to prevent deflation. I agree with you on that, since I prefer price stability. Also if people are taking unnecessary, they shouldn’t expect to be made whole.
I disagree with you that the money printing will not cause the price of things to go up since the National Debt is growing. I’m staying in the stock market since I do not want to Sell Low and Buy High.
My wife in hr said it best…. The bigger the company,the longer it takes for the cuts to happen, but they are coming. There is more red tape the bigger a company gets and it simply takes longer to execute the shedding plan.
Isnt bankruptcy a tax favorable ending? If you get a PPP loan or any small business loan that ends in bankruptcy is there a requirement to pay it back ? Many companies will go bankrupt imo just to avoid being liable. Then a few months or a year later a new business will emerge with no liabilities from the old business.
SBA turns defaulted loans over to the IRS. they stick to you like student loans do.
It’s a little more complex than that you can make them an offer and if they accept and you perform on it, you’re “free.” But mostly, you can’t just use bankruptcy to dodge an SBA loan.
Employment story is going to be complicated. Construction/factory workers being called back. some service industry where they can limit contact with public also on up swing. On other side some companies that were holding on to employees – white collar who could work at home- are starting to lay off because business is drying up and they can not support staff that is not working.
You keep harping on this deflation thing and I get it. Demand shock and no buyers for things, but that’s only true of some things. On other things, like groceries and soon airline flights, things are going to go higher. I don’t get how you’re so confident in this stance when there’s so much evidence that the dollar is being systematcially destroyed. I’m unsure either way at the moment but I’m very afraid of my savings being destroyed vs. afraid of having more buying power in the event of deflation. The Fed and government will never allow this to happen. Unemployment benefits, free money, and other tricks will be used to stimulate the economy and devalue dollars. Why are you so confident that this won’t happen? Where’s your money parked? Gold? That’s not an asset for deflation (I know you’ve said it is and I don’t see how that’s the case). I’m a long time reader and am respectful of your views and have held many of the same ones but I’m really not sure about this assertion that deflation is in the cards for any duration of time.
You are completely right. Deflation completely destroys the system.
Inflation fixes it.
I wonder what way they will go.
…And since “The System” is what is destroying America…….
It really is a shame, that Americans are by now almost uniformly so indoctrinated and hapless, that they are willing to sacrifice their country, their neighbors, their children and even themselves; solely in order to help prolong some “System,” which was never even intended to be anything more than a racket facilitating a small cadre of abject talentless mediocrities, robbing everyone else blind without any effort at all.
Amen and Amen!!! Absolutely beautiful system that over time takes ownership of all assets in return for being the control point in the system (issuance of debt as money and the control over new debt and old debt via the cost of debt).
Its taken over a 100 years…but they can expand their balance sheet (what they own) to infinity and beyond via US dollar denominated computer bits…at whatever cost one could asses for that.
Since the top 1% now has a controlling stake, I call that the system.
I’m just seeing this now but I can’t like this comment enough
Its the massive debt unwind that causes the deflation…it’s tens of trillions of debt going south.
Debt deflation is not the same thing as consumer price deflation
Nope…but they are certainly linked!
However, what was truly remarkable about the March consumer credit report is that one look at revolving credit, i.e., credit card usage or repayment, shows something striking: in March, Americans repaid a record $28.2 billion on their credit card bills as US consumer society literally went into reverse and instead of spending wildly as it does every other month, usually spending what it can’t afford, consumers repaid the most on their credit cards ever.
link to zerohedge.com
Nope…but they are certainly linked!
However, what was truly remarkable about the March consumer credit report is that one look at revolving credit, i.e., credit card usage or repayment, shows something striking: in March, Americans repaid a record $28.2 billion on their credit card bills as US consumer society literally went into reverse and instead of spending wildly as it does every other month, usually spending what it can’t afford, consumers repaid the most on their credit cards ever.
Thank you for converting the data to percentages.
“If you believe all this printing will soon result in inflation, you are mistaken. “
Define “soon” please.
Define inflation
🙂 My def:
Inflation is the expansion of the money supply. Price increases on the other hand are just that.
Does that help? I guess if I had been around here more I’d know how you define it. Regardless, I’m genuinely curious what you think that both inflation and price increases will be say, a year from now.
I appreciate that you put yourself “out there” btw, intellectually speaking.
The money supply is rising dramatically, but the velocity of money has to be falling dramatically. It’s at times like these where the assumption that velocity is constant leads to errant projections.
“Inflation is the expansion of the money supply. ”
Then there will always be inflation
When will the Phillips Curve discussion come back to haunt?!
I thought the Phillips Curve was proven in the least inconsistent when 70’s stagflation reared it’s head. 🙂
“Then there will always be inflation”
Not if you pick a money supply measure broad enough to include much of what is traditionally deemed credit.
Inflation IS an expansion of the money supply. What else could it even be? It’s just that exactly what constitutes the money supply, isn’t obvious nor a given.
We have to look the US Dollar more as a commodity and less of a proof of work at this time.
At this point people are accumulating this commodity witch is deflationary as it increases commodity price.
When people start to dissipate this commodity it becomes inflationary as supply will increase.
Inflation is money being created faster than the supply of goods and services.
In our economy this is caused by purchasing on credit. When something is purchased using credit, the interest on the credit inflates the cost of the purchase.
Deflation is when money is being destroyed by default on debt. When a debt is defaulted on the money supply shrinks, but the goods purchased by the debt still exists.
During severe economic contractions, debt default skyrockets destroying money while at the same time introducing additional goods to the market due to repossession. The effect is less money chasing an increasing supply of goods.
This puts downward pressure on asset values which in turn creates more debt default because people do not want to continue to make payments on assets that are worth less than they owe. This results in a feedback loop that continues until asset prices fall in line with incomes, or the perception of values increases.
Deflation is also caused by paying off debt.
Hey, those are reverse hockey sticks!
Seriously, my sis and her husband have a restaurant and have had one for years. They fired all their workers, but two cooks. They’re trying to make a go of take-out only orders. We’ll see….
Post inspired by@Six000mileyear who asked about percentages