No Progress Since October 3
On October 3, initial unemployment claims were 767,000. Since then, initial claims meandered from a November 7 low of 711,000 to a high of 927,000 on January 9.
Last week claims were 725,000. This week they jumped to 770,00 above where they were at the beginning of October.
Continued Claims
We have seen slow progress in continued unemployment claims but much of this is masked by people expiring all of their state benefits and falling off the roles onto various federal programs.
The federal numbers are so skewed by fraud, reporting errors, and double counting distortions that I stopped posting them.
Powell Says the True Unemployment Rate is Actually 10%
Fed Chair Jerome Powell commented that the true unemployment rate is 10%.
I agree. For discussion, please see How Did the Fed Conclude the Real Unemployment Rate Was 10% in January?
On March 5, following the latest jobs report and using Powell’s methodology I calculated The Labor Force Adjusted Unemployment Rate is Still 10%.
Mish
It really saddens me when I see so much unemployment. The numbers are usually fudged so they look better or worse than they really are. With an average unemployment that tends to be around 5% at a low point in some areas of the country, I do not need to look far to notice that unemployment is high when you see so many Uber and DoorDash people. I am glad that there are people who are making money rather than waiting for the government to feed them, as I have done. It is that saying “unemployment is decreasing” is a joke. The only true way to be secure is to not rely on a job and instead to create true wealth by acquiring assets that pay month in and month out regardless of what happens to you. The vehicle is irrelevant (ie businesses, real estate). What matters is the mindset. These unemployment trend is just a bigger trend of what has been happening in the world. People relying on one job, one career, one skillset, are going to get creamed now and in the future. Best to take of yourself. I somewhat agree with PecuniaNonOlet and Eddie.
IfeanyiOMW – https://www.omwroadside.com
What do people expect with the Democrats
Still getting calls for jobs from all over. This is a bifurcated economy. This is why everyone needs a higher tech education. The midwest appears to be toast again economically.
I answered one of those calls. Today I wrapped up my last day of work at my present employer. Monday I start a new job. The two areas that are hiring are MIL/DoD and healthcare related engineering. I’m actually switching from MIL/DoD to healthcare.
FYI
Shrunken labor force too though. Whether the dropouts can make it back into the labor force will be a big deal for recovery.
Great info here, Mish. One of many disinflationary dynamics unfolding, largely ignored by the consensus ‘experts’.
It will be interesting to watch what happens the next month or so as people spend down their stimulus money.
My wife and I received 7k yesterday in stimulus funds. That is a large sum of money. While we are using ours to buy a rental property most of the people I work with in my field are spending it down.
That spending is going to be a massive short term stimulus to the economy and most of it will find its way to the rich. As the money is spent at businesses, the business owner will benefit. The person spending will get some rapidly depreciating goods (really rapid for restaurant food) but the business owner gets money that they typically invest.
When the stimulus runs out, is spent, or buried that’s when the true state of the economy will appear. I do not believe there will be more stimulus given directly to the masses here in America.
The fed will stimulate, but will that be enough if main street is not working?
The eviction and foreclosure moratoriums are supposed to end at the end of the month too. I wonder how many will piss that money away instead of paying back rent, and find themselves on the street.
From the NY Times (repeat layoffs)
New evidence from California may offer a partial explanation: According to a report released Thursday by the California Policy Lab, a research organization affiliated with the University of California, nearly 80 percent of the unemployment applications filed in the state last month were from people who had been laid off earlier in the pandemic, gotten back to work, and then been laid off again.
I wonder if false starts will be the norm for awhile. Restaurants hire up because vaccinations are up and bans are lifted but patrons still don’t come out so you have to reset. Possibly multiple times.
After a year, people’s behavior will have changed. Even if they feel safe to go out maybe they became better cooks and will never go out as much as they used to. Or maybe they bought a sweet home theater setup, and won’t go to movies anymore… etc.