Employers added jobs for a record 113 months through February but that streak will end with a bang in the March as a Record 3.28 Million File for U.S. Jobless Benefits.
“We haven’t seen this big of a free fall before,” said Keith Hall, former director of the Congressional Budget Office and adviser to President George W. Bush. “Not even during the Depression…It’s really like an instant Great Recession.”
Northern Trust Chief Economist Carl Tannenbaum said if half the workers in hard-hit industries, such as restaurants, retail and personal services, are laid off the unemployment rate could rise 10 percentage points, to more than 13%. That is well above the post World War II record high of 10.8% at the end of the 1981-82 recession.
Retail Grinds to a Halt as 47,000 Stores Close
Yesterday I reported Retail Grinds to a Halt as 47,000 Stores Close
Walmart and Amazon are hiring, but must most industries are hit hard.
Dental assistants, massage workers, physical therapists, house cleaners, airlines and hotel industries are decimated.
US Output Drops at Fastest Rate in a Decade
Markit reports US Output Drops at Fastest Rate in a Decade
Europe is in worse shape with the Largest Collapse in Eurozone Business Activity Ever
Nothing is Working Now: What’s Next for America?
For a 20-point discussion of how things are likely to unfold, please see Nothing is Working Now: What’s Next for America?
Mike “Mish” Shedlock
The sadest part, is there are people that really need elective surgeries. They’re told it will have to wait. That’s what most of us have been doing. I was hoping that 2020 would be the year I, finally could “get fixed” thinking how perfect those #’s are. 2020. Just my luck. It turned upside down to hell. I’ve waited since 1975, & 1987, what’s a few more years. To late that’s another 30 yrs & I will be gone. I guess keep being pro- active & maybe someday. 🙏😎
3.2 million? Pfft Child’s play. 1,000,000 people applied for employment insurance in Canada this week, on top of 500,000 last week. We have 1/10 the population of the United States. We are so screwed.
Yes applied but not yet getting benefits because applying is Step 1, Step 2 is verification and guess what there is no one to do the verification and phone lines jammed – so yes apps up, benefits on hold because the system is jammed.
I am awaiting Lawrence Yun’s NAR housing market report with a fresh hot batch of popcorn.
Ha! I’m just guessing, but I bet there’s never been a better time to buy!
With so many Labor Department computers crashing, those who could not file this week will add to those next week. Other states will support this historical level as they issue “stay at home” orders for the first time. The unemployment surge will end when Dept of Labor websites can handle weekly claims without crashing.
I am waiting for health insurance companies to report their quarterly stats. I wonder how they are going to pay those claims.
A real leader would give a target back-to-work date based on input from:
There are difficulties with this. For one, there are no good economists (full stop?) who actually look at reality and could say what the actual trade-off will be in terms of lost productivity, money flows, and the wider effects — all the way to: how many people are going to have major medical issues or will die for OTHER reasons if the economy is on ice for 2 months? Granted that may be incalculable … but is anyone making a good effort?
Trump’s Easter deadline for the virus (!) is arbitrary demagoguery. It does no one any good, and I don’t see how it won’t blow up in his face when, come Easter, the hospital situation is a top-headline disaster.
This was done today, by the excellent site Marginal Revolution. Go to the comment section under my nym to see if it’s worth it to quarantine rather than ‘do nothing / herd immunity’ (the route the USA is doing, de facto). Here:
Thanks. Not exactly rigorous. 🙂 Two months sounds plausible. Six months does not. (How many suicides alone if swaths of people can’t work for 6 months?) But that’s just my hearing.
GoFundMe Confronts Coronavirus Demand
Americans are turning to crowdfunding to cover coronavirus-related costs while the government prepares to deliver on its stimulus plan. But most campaigns aren’t meeting their goals.
March 26, 2020, 11:07 a.m. ET
That’s 3.28 million that applied for unemployment pay for the week ending 3/20.
Figure another 3 million for those who don’t qualify for unemployment compensation (part timers, illegals, and those without 6 months employment at their last employer).
Figure another 5 million that got their hours cut
Next weeks report will be even worse, but they passed the stimulus bill. Who cares if anyone has a job? We will print our way to prosperity. What could possibly go wrong?
There is no printing going on it. It is all electronic money. Some places are starting to not take cash because of virus transmission.
You forgot all the IC’s and gig workers that do not qualify for unemployment because no one pays into the fund for them. One of the big disadvantages of not being an employee.
Brother can you spare a dime?
Tom Waits
Bing Crosby
I hear Patagonia will have no layoffs, and will be paying full wages to August, even to cashiers who are sitting home on their butts. Because Chouinard is rich and he can and wants to do this.
And yet a guy like Bezos, the richest man in the world, has the gall to ask people to donate to his fund for Covid-19 infected contractors at Amazon. There really are two kinds of rich people in this world.
But he still won’t sell his trendy vests to Wall Street? LOL
Back to work?
We’re just in the 2nd inning of the game and people are leaving for their cars in the lot, confident of the result.
From the propaganda channel, DNR (do not resuscitate) decisions for CV sufferes…
Can you say: Plunge Protection Team? Your tax dollars at work. In the future, you should not confuse nominal and real prices. Nominal Price = Real Price + Inflation. So if a stock costs 0.010 $/share (real), and inflation is 100M%, the nominal price will be $1M a share. Does that make you rich? Hardly.
Do the ventilators actually save COVID 19 patients? Or just prolong their suffering? Some data on this would be useful. They certainly endanger the health care professionals running them.
Edit function not working again Mish. People will just have to mentally edit my posts as they read.
This number is going to be heavily revised next Thursday Mish, much higher and will keep going up. In fact the 3.28 million people filing have overwhelmed the systems at state level, UI will be granted to many retroactively because of that.
The long-term is harder to guess at, if this goes on for another month till the end of April I am thinking some businesses on the margin just will not come back from it. If we are still basically where we are or worse by one month from now we will see more stimulus, more debt.
As to the deflation/inflation (HYPER???? Anyone?) debate, and there is one in spite of your certainty Mish, it is too early to tell. But, I am thinking that a lot of debt will go bad and just get wiped off the books.
I was watching a Youtube tyhe other day because Peter Schiff was being interviewed, we all know how is widely dismissed as being right the same way a broken clock is, but I thought I would watch anyway, and he made the point that money only has value as it relates to what it can buy in the way of goods and services. If production of those goods and services goes down while money supply rises (and god knows between the Fed and unlimited QE as well as Fed bailouts, and the federal government and trillions more in bailouts money supply is rising at a pace unimaginable even a few months ago) the result can only be inflation. It cannot be deflation. Yes, the price of some things will fall temporarily as demand falls because of the present emergency, but when that is past us what will be left is far lower production and far more money in the economy, prices will rise just as unimaginably as the current pumping and then some because once you start hyperinflation the only cure is more hyperinflation.
Weimar did manage to stop hyperinflation of it’s papiermarks but only by deleting that currency and going to the rentenmark in which every denomination was backed by German assets including everything in Germany, agricultural land, industry, factories, everything. And even then the economy crashed, though that crash did make it possible to start to rebuild, but the damage was done and the cure was Adolf Hitler. He put people back to work but not in a constructive way, he did it by getting them prepared for WWII, even the autobahns were meant to facilitate troop and materiel movement.
“After the Occupation of the Ruhr in early 1923 by French and Belgian troops, referred to as the Ruhrkampf, the German government of Wilhelm Cuno reacted by announcing a policy of passive resistance. This caused the regional economy of the Ruhr, the industrial heartland of Germany, almost to stop. The occupation authorities reacted with arrests and deportations to strikes and sabotage. Those displaced and left without income by the Ruhrkampf and their families fell back on public income support. Tax revenues plunged as economic activity slowed. The government covered its need for funds mainly by printing money. As a result, inflation spiked and the Papiermark went into freefall on the currency market. Foreign currency reserves at the Reichsbank dwindled.[2]” Wiki
Sound familiar? Economy has an overnight heart attack with millions unemployed, fall back for support on public treasury printing presses, tax revenues plunge, production goes out the window, and inflation results.
We actually went through something similar after Nixon closed the gold window, not as severe, but I well remember the years of inflation, especially during the Ford and Carter administrations and the total lack of effective response till Volker raised the prime lending rate to over 19% multiple times. The oil embargo did to our economy what happened to the German economy in the occupation of the Ruhr. Not to that extreme a degree, but the slowdown was severe. I remember the 12% plus inflation because I was already grossly underpaid in the new all volunteer military and while inflation was double digits year in and year out we got 1-2% raises, that was before the COLA laws were passed. In a few short years we were making about half as much in spending power as we had in 1976. And it was Volker raising interest rates to 19% that gave us the recession of 81/82 that was the previous record for unemployment claims. He stompped hard on the economy and that did put the inflation fire out so it did not morp any further into hyperinflation.
We can’t (or should I say will not) do that now because sudden interest rates over say 15-19% would nuke the debt markets in a way it did not then, if there was a mountain of debt then there is an etire galaxy of debt now. It would probably result in at least a billion deaths worldwide as economies around the world simply stop. We would see canibalism. That is how bad it will get. Then again something like that does seem inevitable since just continuing to add zeros to the books will eventually do that as well. We can’t just keep inventing new names for larger numbers, like a petatrillion dollar minimum wage. The time has to come when economics and finance are just irrelevent. Survival becomes the only thing for enough people to bring it asll down.
By the way, did you see that in spite of the Fed support for all markets S&P cut Ford Motors to junk today? I expect that Ford is not the only one though, GE, GM, and other larger players in the commercial paper market are also going to get slashed. Borg Warner I think I would get some put options on. But that is just me and NOT FINANCIAL ADVICE!
“But, I am thinking that a lot of debt will go bad and just get wiped off the books.”
…
Well, that is the issue.
The problem is that debt is owned by “the rich” … and they don’t want any part of taking a loss. Just see what Obama did in the aftermath of the great recession re housing. Write offs should have been much greater, but Treasury Department rolled out a smorgasbord of programs (HAMP, HARP, etc) to keep mortgage debt current in one form or another.
When I say wiped off the books (which would be deflationary if it was otherwise viable debt) I mean that that debt was already basically written off, and even then quite a lot of it was bought at face value by the Fed. So the Fed traded good hard currency for paper that was not worth it’s own weight in recycled materials.
Also, when they changed the FASB rules requiring companies to report assets at MARKET VALUE to allowing those garbage bonds to be reported at FACE VALUE they effectively printed that much in “new money” because it all went from being worth zero to being worth trillions. Ans because those worthless financial WMD do not have to be accounted for till they reach maturity I think we have a long way to go before most of it is even recognized as fruadulent. Most of the maturities were 10 years and longer, meaning that quite a lot of it has not even matured yet, effectively meaning the GFC never really ended, just got postponed till the maturity dates of all that garbage. And, quite a lot more has just been rolled over which effectively gives value to something that had no value and that = money printing.
Can anyone explain what triggers the loss in confidence of a currency or central bank? How large can it’s balance sheet go in relative terms before SHTF, is there any history that shows how it happens? I’ve considered buying gold but I figure it’s going to be outlawed again. Maybe I should quit worrying and start drinking…
Good question. Having watched carefully since Nixon took us off gold in 1972, I can tell you for a certainty that I do NOT know how to predict the SHTF moment. I believe the problem in predicting, other than it being about the future, is that the CBs and politicians continue to change the game rules, kinda like the dealer in a poker game randomly handing out wild jokers mid-hand to select players.
The game will go on until it doesn’t. No statement by an elected talking head anywhere is of any value in estimating when that moment will arrive, IMHO.
Goodwill, and counterparty faith that you will ultimately pay, plays a large role. Argentina has a much shorter leash than the US, which has has been the indispensable nation since WW2. Slowly but certainly, and at an increasing pace over the past few bubble blowing decades, the US’ status have been dwindling, though.
If the US, as now seem at least possible if not even likely, really messes this one up; assuming China does not; will lose a lot of that relative goodwill and historically built faith. Other people and countries will simply, subtly at first then increasingly, start being more concerned about being properly positioned in China’s sphere, than in the US’ one. Hence won’t be as willing to blindly assume America will come through on her promises. Until at one point, The Fed printing more money, won’t work any different than if Argentina does so.
Watch inflation figure closely monthly.
Inflation is the key.
If they outlaw Gold purchases that would be a good sign!
I think first signs would be a weakening dollar in the FX market.
Also there’s plenty of Gold above ground, can never be a shortage. So if people aren’t prepared to offer physical Gold for dollars that would be another sign.
In happier news, the Cheesecake Factory is telling their landlords to shove it in April. Really, everyone in a similar position could do the same. When not paying rent catches on, watch how quickly a new stimulus package aimed at “helping” entities meet their mortgage/leasing obligations gets passed. True bank bailing by inflating the currency.
By the way, the pancakes at the Cheesecake Factory (only served on Sundays AM) are OFF THE CHARTS delicious!!! They do something special to them, I don’t know what…
Chain reaction of “bailouts.” How does this not result in a New World in which government entities own/control everything? I think 10 years from now we’ll be talking about “the old system” because it will be gone.
Yes and part of discussions of the “old system” will include how in the golden olden days, there used to be last mortgage payment block parties where the neighbor/friends’ last statements were ritually burned in a glorious fire. A neighborhood that grew up together would hold these shindigs around the time dad was retiring from his factory job and his kids were nearing the end of their college days and getting ready to start lives on their own.
Nowadays no one buys a house thinking they will pay it off in their lifetime, but are rather banking on it going up in price when they are ready to sell.
The trend now and for the last 20 years or so is, like you more or less stated, we all work for the government-banking entity.
I was surprised to learn that Cheesecake Factory did so much leasing. I would like to believe that a successful entity like them could break from the clutches of the landlord-leaches and purchase their own land. I believe a MacDonald’s board member stated a few years back that they are essentially a real estate holding company fronting as a fast food restaurant since they owned their land. The implication being that their greatest profit was the increase in “value” of the dirt upon which their restaurants sat. Sad and very indicative of the rot!
On McDonald’s, I once heard, probably 30 years ago, the CEO say that McDonald’s is in the real estate industry, not the restaurant industry. That always stuck with me — maybe because I’ve never figured out what he meant! … I’m not sure it would be in order to profit from rising real estate prices, though, since they tend to stay put and never sell the land.
Wow, 30 years ago?! I must have heard a rehash of the statement. If they do own the land of some of their older franchises, then playing landlord really would be profitable especially for California properties if they fall under Prop 13.
McDs corporate is landlord to about 15% of its franchisees.
“We haven’t seen this big of a free fall before,” said Keith Hall, former director of the Congressional Budget Office and adviser to President George W. Bush. “Not even during the Depression…It’s really like an instant Great Recession.”
More like an instant Great Depression.
This is only a down payment for what’s coming if we don’t move quickly to get a restart plan in place, one with TDS-proof, objective criteria.
Zero new cases and deaths is a Depression ll plan.
If we fail in that, those awaiting unanimity among politicians and medical “experts” as to when to restart, will be sitting stunned in August as unemployment rockets past 30 million.
This is a genuine emergency, unlike the AGW boondoggle, there will be immediately devastating results obvious to all, and guaranteed, in months of lockdown delay.
The numbers don’t lie; Even worse, they don’t care whether we like The Donald or not.
It’s either isolate elderly, drive antivirals, antibodies and vaccine(s) with maximum possible, reasonable distancing and caution, or Depression ll for the miserable survivors.
There will absolutely NOT be unanimity among our “leaders” before Christmas.
I am moving towards this opinion too.
If we don’t see some reason/data in the next few weeks from our and other credible governments/health care systems to keep this stay at home policy in place we need to get people back to work.
Its immoral to ruin nations and peoples livelihoods because 0.5%-2% of the population, generally 65 and up and generally with other serious health issues may contract this and die sooner than they otherwise would’ve. I know this sounds callous but if you look at the big picture and not look at it through a straw its crystal clear.
Also what percentage of people die from cigarettes ? yet they still sell them to the population.
What percentage suffer and die from chips and soda? yet they’re not issuing a stop eating garbage order.
What percentage die from years of eating “round up ready” vegetables? or suffer the consequences during their life from loss of gut bacteria from ingesting round up.
Abend – definition – abnormal termination or crash, especially of a system popular in the 1960s…
Honestly people should be allowed to choose. Those who support going back to work should sign a binding letter that in the future when they’ve reached 65 and above and Covid 39 or whatever arrives, they would be left twisting in the wind.
If they are willing to do that, then yeah, I see no problems. It’s like our companies. I don’t support bailing out either companies or individuals who refuse to accept consequences for what they do.
Yes, fortunately Trump is already talking about opening the economy back up by around Easter which is good because, regardless of the actual end game deadline, the discussion about the deadline should be happening NOW. The bad part is that because Trump is actually acting sensible, the MSM and the Democrats will, by default, take the opposite position and say its bad, “he’s risking lives, etc.”
Perhaps Trump should have said that we ought to keep the economy closed until end of year, so that the MSM and Dem’s would holler “let’s get back to work ASAP!”
Although, its best to play your cards honestly, which is what Trump tends to do, arguably a little too much at times!
Don’t worry. Stock market up big 3 days in a row.
Yes, what better reasons for the over-valued market to reach all-time highs. Everywhere you look there is a reason: obscene-panic money-printing for Wall Street, mass unemployment, plunging GDP. generally…chaos. By my estimation, the DOW should be at a PE of 50 or so in anticipation of the dawning of a new golden era for the world economy. Just remember my old hero, Dick Cheney’s addage “Debt doesn’t matter”.
/sarc
Aliens can come to earth and kill everyone, but as long as electricity is still running, the Dow will continue to reach all time highs.
Supposedly Ben Bernanke has been hired back as a consultant to the team …………….
Gives those that didn’t sell another chance.
Really interesting how high it can go here. 50% retrace already? Everyone has been expecting a bear rally retrace … but the compressed time frames here are insane. Movements that “normally” would take months or weeks now take days or hours.
My guess is that’s it now. Who wants to be long after a correction going into the weekend. Someone I suppose but I wouldn’t.
An interesting article here, it was written in 2015 but more relevant today.
“It’s really like an instant Great Recession.”
…
And yet many (on tv) are saying economy will “light switch” back to normal once virus passes. Good luck with that.
Today even the most naïve person would have to realize disconnect between stock market and economy.
Dow +800
While earlier this morning:
WASHINGTON (Reuters) – The United States “may well be in recession” but progress in controlling the spread of the coronavirus will determine when the economy can fully reopen, Federal Reserve Chair Jerome Powell said Thursday in a rare network television interview on NBC’s Today Show.
The Stock “market” is set by Fed policy.
Any possible correlation between it and “the economy”, exist only as a result of even The Fed ultimately needing an economy to rob, in order to prop up stocks indefinitely.
Obviously none of them have ever tried to turn the travel direction of an aircraft carrier or VLCC 180 degrees.
Bear markets and recessions don’t end with that kind of optimism.
What U-3 rate does that translate to ?
The monthly employment survey is generally taken the week including the 12th.
I would find it humorous if BLS reports job gains for March.
They probably will
Well they have to include it in the April report. Government employees will proudly report it as Trump hates them anyway. Now the shoe is gonna be on the other foot.
Blew past consensus:
“A staggering total of 1,000,000 initial jobless claims is Econoday’s consensus forecast for the March 21 week, a week that suffered wide shutdowns in recreation, food services and manufacturing. The high estimate for the week goes up to 2.737 million. Initial claims in the March 14 week were up 81,000 to 281,000.”
Does anyone ever go back and reconcile Econoday’s predictions to see what percent of the time they are right? My gut feeling is that it can’t be very high.
Didn’t stop the market from soaring higher, the second day straight, despite the negative number.
Can you say: Plunge Protection Team? Your tax dollars at work.