Initial Claims vs Continued Claims
Notes
- This week’s initial claims (6.648 million) exceeds the highest ever continued unemployment claims (6.635 million).
- The two week total of initial claims is 9.955 million
- Prior to the last two weeks, the previous high in initial claims was 695,000, set in 1982.
There will be another surge next week as state servers are still flooded with calls.
Household Survey February 2020
Based on the hard numbers, the number of unemployed will go up by at least 10 million. But states are still scrambling to handle the surge in claims. Another 5 million or more are likely in the pipeline.
If we assume a total of 15 million, the unemployment rate would be (15 million + 5.787 million) / 164.546 million = 12.63%.
We will not necessarily hit that number in tomorrow’s jobs report. But whatever tomorrow’s number is, it will be worse in the May 1 report for the month of April.
The Huge Fear: How Do I Pay the Bills?
Please note the Huge Fear: The Huge Fear: How Do I Pay the Bills?
Unemployment insurance helps but even under new rules, gig workers and the self-employed will get hit very hard.
Catastrophic Decline in GDP
Goldman expects a Catastrophic GDP Decline Worse than Great Depression
No V-Shaped Recovery
Goldman also expects a V-shaped recovery. Forget about it.
The Covid-19 Recession Will Be Deeper Than the Great Financial Crisis
When people finally do return to work, it will not be business as usual.
It will take a long time, if ever, for the same sentiment to return.
Those previously thinking of buying a new car will hold off. People will travel less and eat out less, especially retired boomers who just had a quarter or more of their savings wiped out.
Nothing is Working Now: What’s Next for America?
On March 23, I wrote Nothing is Working Now: What’s Next for America?
Globalization is not over, but the rush to globalize everything is. This will impact earnings for years to come. So don’t think about new stock market highs either.
Mike “Mish” Shedlock
The surge was to be expected. With the new stimulus, unemployment is now significantly greater than an actual paycheck for many/most people, giving employers the option of giving employees a big raise by laying them off. I haven’t let anyone go yet, but I have had a few employees request it.
Really? If someone is at minimum wage with 2 kids and a spouse they get $3400. $3400/$7.25/40 is around 11 weeks of work. Add in whatever unemployment is. And people are asking to be laid off, with potentially not getting rehired within that time period to make it pay off?
I would guess they’re worried about getting the virus at work. I was ready to quit if they didn’t have me work from home… but I have savings.
As I understand it, with the new $600/week unemployment addon, if a person normally gets $150/week on unemployment, they will get $750/week now. I think that lasts 39 weeks, but then they will need to find a job. As I compute it, the extra they get is 39*600, or $23,400, not $3,400.
The governor of my state mentioned that people are actually quitting their job to get unemployment now, and he told them “don’t do that”. If they quit, they will not qualify. The will only get the benefit if they are laid off.
Kudos to the unemployment offices for being able to process twice as many applications this week.
While wearing latex gloves
add that pile to the 150 or so million permanently unemployed,that’s a sizable guerilla force,and with all the firepower most folks have in there basement,could a tactical assault on DC to overthrow our ridiculosly incompetent govt be far behind!
Send in Meal Team Six:https://preview.redd.it/t48fpegfbhp11.jpg?width=960&crop=smart&auto=webp&s=d569fdf16f646e2542cf186068ee0185f175b5f7
I think the real discussion and focus is of the estimated 15 Million that will be unemployed, what percentage will be rehired after all of this. With the number of small businesses closing, mid-large corporation with negative earnings prior to COVID and the decrease in spending per household, maybe half? I have spoken to a lot of local and out of state business owners or managers and they do not intend to rehire everyone after all this. Mostly out of necessity to cut expenses as their companies have tapped out all their credit prior to the COVID crisis.
We can learn from some anecdotes coming from China. There’s an SCMP(?) video on Youtube about a hamburger seller in a mall in Beijing. She had to lay off all her employees, and although the virus is pretty much contained in that city, the mall is still pretty much empty, and she is in no hurry to rehire her employees.
As Mish already said, anyone looking for a quick comeback is being delusional.
This is a perfect storm and we will be looking at a 10 years depression at least.
When there are big layoffs, they always include ‘bad’ employees (usually employees who do poor work or are hard to manage), who will not get re-hired at the same place when/if they do re-hire.
Oh, and what happens when the next novel virus strikes in 3
Bad news is good news again. The Fed will probably unleash free money for everyone now.
I know someone who was working in NYC who just now finally got onto the server this morning… after a few weeks being unemployed. tech savvy, tried multiple times per day, at different times.
Oh by the way, ‘first’ for those of you who have followed Mish for more than a decade.