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.
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