With Over 22 Million Claims, What’s the Unemployment Rate?

With each passing week the grim stats add up. But it also makes it easier to estimate the unemployment rate for April. 

Let’s crunch the numbers starting with totals from the March Jobs Report and my understatement Unemployment Rate Jumps to 4.4% But Worst is Yet to Come.

Household Survey Numbers

Unemployment Rate Calculations

The unemployment rate does not come from caims. Rather, it comes from a phone survey in the week that contains the 12th of the month. That makes the current reference period April 12-18.

The March unemployment rate of 4.4% was wildly low (and will later be revised), because the reference week was before the mass layoff started. That will not be the case in April. 

Estimate of Claims to Come

There are two more weeks left in the month. I estimate there will be another 6 million new claims in the next two weeks.

Estimate of the Unemployment Rate

If we assume claims approximate Household Survey answers and further assume the next two weeks of claims were unemployed in the reference period We can estimate the unemployment rate as follows:

(New Claims + Existing Unemployed + Estimate of Claims to Come) / Labor Force

22.034 Million + 1.353 Million + 6 million / 162.913 Million = 18%

I have done three such estimates in the past 4 weeks and this is the most optimistic one yet. My ranges have been in the 19-22% range.  

Michigan Unemployment Rate

Michigan has been swamped with claims. Over a million people have filed for unemployment claims, out of a labor force of under 5 million. 

A recent number crunch on Michigan yields an unemployment rate of 24%-29%, truly a disaster. 

For details, please see Over 25% of Michigan Workforce Filed For Unemployment.

What’s Next?

For a 20-point discussion of what to expect, please see Nothing is Working Now: What’s Next for America?

The huge fear now is How Do I Pay the Bills?

This is the second crisis in 12 years. These scars will last.

No V-Shaped Recovery

Add it all up and you should quickly arrive at the correct viewpoint: The Covid-19 Recession Will Be Deeper Than the Great Financial Crisis.

Mike “Mish” Shedlock

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Advancingtime
Advancingtime
4 years ago

Of the thirty million small businesses in America, only 1.7 million received money from the 2.3 trillion dollar aid package. The promise of help from the Paycheck Protection Program delayed mass firings from the 54 million Americans employed by small businesses but now that the government has failed to come through the carnage is about to begin. More details in the article below.

GeorgeWP
GeorgeWP
4 years ago

There is an assumption that the current infection surges will run their course and then the economy can open up, tough we need to be wary of a second surge. But much of Europe is supposedly in lock down. The rate of infection growth has slowed, but there is no indication it is under control. In some countries including the USA it may be too late to ever arrest the initial surge and the virus is now permanently in the wild, same as flu and rhinovirus. But more deadly.

This means heavy restrictions may have to be abandoned and people will just have to deal with social contact and travel being more dangerous that it used to be. Travel to countries where the virus is contained will be heavily restricted. And of course their may never be a vaccine, but presumably there will be treatments.

I hope governments are working on Plan B.

Casual_Observer
Casual_Observer
4 years ago

A lot of it will depend on if the household survey is close to the UI claims.

MATHGAME
MATHGAME
4 years ago

The unemployment numbers together with the stock ownership distribution by wealth shows pretty conclusively that the Fed and Wall Street are just laughing hysterically at the majority of people in the country as they poke fun at stories about “wealth gap” and keep on widening it to their hearts content.

Mish
Mish
4 years ago

“April’s employment numbers could be highly skewed since many companies surveyed for the BLS survey are on hiatus.”

The BLS does not survey companies or look at claims. It surveys individuals.

RonJ
RonJ
4 years ago

“Cantor Fitzgerald Slashes Jobs, Prepares To Cut More Amid Economic Downturn”

Another addition to the unemployment line.

moyerdere2
moyerdere2
4 years ago

week over week claims dropped by 1.4 million, could that be the largest drop ever?
This is probably why the stock market has been going up!
The economy is roaring back! This is absurd….

cbide
cbide
4 years ago

April’s employment numbers could be highly skewed since many companies surveyed for the BLS survey are on hiatus.

anoop
anoop
4 years ago

“This is the second crisis in 12 years. These scars will last.”
What scars?

As soon as the economy opens, it will be like letting out a megaton of starved people on a buffet. In fact, people will be prone to over-consume and get all their desires out of the way in case there’s a second wave.

Six000mileyear
Six000mileyear
4 years ago
Reply to  anoop

There will be an initial surge in retail once things re-open. Long term there has been major damage to household budgets. All of the paycheck-to-paycheck people and those with insufficient savings are wiped out and many will give up lattes, Netflix, and anything discretionary.

Galfer1
Galfer1
4 years ago
Reply to  anoop

anoop, your point is valid; I heard one Chinese woman, purportedly able to shop (I have VERY little faith in Chinese data/information), again, saying, “I’m going on a revenge-buying spree.” Interestingly, just before C-19 was finally regarded an enormous issue, I read an article explaining that Chinese consumer debt levels were high enough to significantly negatively affect Chinese GDP, and soon. How much debt can Chinese consumers handle before that buffet can offer only Spam and Raman?Interesting that C-19 began just afterward.

numike
numike
4 years ago

Landlords in denial as deflation beckons
Economists warn double digit house price inflation is about to turn into double digit house price deflation, almost overnight. Some landlords are even being advised to get out as aspiralling unemployment pressures rents lower link to newsroom.co.nz

Casual_Observer
Casual_Observer
4 years ago

Debt deflation is on its way. Bankruptcy filings will go up overall both for businesses and individuals. Can these businesses take government bailouts and then declare bankruptcy and never have to pay back the zero interest loans they took out ? That would be the quickest way to a recovery imo.

tokidoki
tokidoki
4 years ago

The Fed will buy everything. Don’t worry. And the sheeples will be voting for it, not realizing that billionaires with massive liabilities will now be billionaires outright.

Welcome to Banana Republic: USSA.

STF
STF
4 years ago

@Mish – interested to hear your thoughts on the stock market. Can we live in a world where there is debt deflation, PEs shooting through the roof, yet stock market hitting all time highs due to Fed intervention. For how long?

Dubronik
Dubronik
4 years ago
Reply to  STF

That would be an interesting topic. Who is bidding up the market? There are always going to be some speculators who bid or gamble either up or down. But I have a hunch that this is more than just those individuals. Where are they getting the money from?

TumblingDice
TumblingDice
4 years ago
Reply to  STF

@STF In all economies There are certain businesses that flourish and others that are negatively impacted.

Not all stocks need to go down. Two that I own which are doing well are Clorox and General Mills.

MATHGAME
MATHGAME
4 years ago
Reply to  STF

Microsoft soared 30% since the bottom, while Apple has jumped 25%, Amazon has risen 24%, Facebook is up 21% and Alphabet surged 20%.

A large portion of these market moves are driven by ETFs and index funds.

Half of the 10 largest firms in the S&P 500 are IT or consumer discretionary comapnies.

The FED.

sabaj_49
sabaj_49
4 years ago

as self employed worker I filed yesterday for the $600 per week
my business is way down since no one can move and apartments don’t need much work done
besides I don’t want to go into their petri dishes of living

Quatloo
Quatloo
4 years ago

I’m seeing local businesses starting to shut down permanently. A gas station and fast food place (with drive-through) most recently.

The Trump plan to re-open the economy actually looks promising. Bill Deblasio’s statement about waiting until August to begin reducing restrictions in NYC would be a disaster. People will not stay inside all summer in New York, it just won’t happen.

ohno
ohno
4 years ago
Reply to  Quatloo

Exactly. Many small, local businesses aren’t coming back. I keep hearing idiots say “well they can get a loan”. LMAO stupidity abound. Not to mention where are all these people going to get jobs when many places won’t open up? The govt has 2 choices: keep paying or pitchforks. And you might get both.

Bcalderone
Bcalderone
4 years ago
Reply to  ohno

Pitchforks? You mean guns, right??

Schaap60
Schaap60
4 years ago
Reply to  Quatloo

I agree with that. I don’t think people will stay inside anywhere all summer. Support will wane the longer this goes on. It seems the government should be ramping up its capacity to test and trace in order to manage reopening to some degree by early to mid-May. I’m not sure it’s being done though. Germany is looking at gradually reopening because it does have a good testing regime in place.

Zardoz
Zardoz
4 years ago
Reply to  Quatloo

The trump plan has a date?

Greggg
Greggg
4 years ago
Reply to  Zardoz

well, trump does have a date… with Stormy Daniels.

Tony Bennett
Tony Bennett
4 years ago

Oil < $18 barrel

MiTurn
MiTurn
4 years ago
Reply to  Tony Bennett

I filled up at the local Wally World and paid $1.68 a gallon. I’m sure it will go lower.

Schaap60
Schaap60
4 years ago
Reply to  MiTurn

My father told me he paid $1.44 in the Sioux Falls area. The closest station to me in California was $3.40 yesterday. I’m guessing the California price includes many things other than the cost of oil.

tokidoki
tokidoki
4 years ago
Reply to  Tony Bennett

10 bucks and I’ll be loading up.

davebarnes
davebarnes
4 years ago
Reply to  Tony Bennett

Buy that F-250 in a few weeks when the dealers get desperate.

Tony Bennett
Tony Bennett
4 years ago

“A recent number crunch on Michigan yields an unemployment rate of 24%-29%, truly a disaster. “

Explains the protests there to open up business.

Tony Bennett
Tony Bennett
4 years ago

Whatever the number, it will get worse.

As illusions of V recovery are dashed.

The cash burn has to be downright awful now.

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