Initial Claims vs Continued Claims
- 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.
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