16.78 Million Unemployment Claims in Last 3 Weeks

Mish

Unemployment claims rose 6.606 million in the week of April 4, the third consecutive miserable week.

Economists at Econoday expected 5 million claims this week but they were too optimistic once again.

The newly revised total for the week ending March 28 is 6.867 million, up from 6.648 million.

The cumulative 3-week total is 16.78 million.

March Household Survey

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How High Will the Unemployment Rate Rise in April?

The unemployment rate comes from the household jobs survey, not unemployment claims.

Nonetheless, we can take a stab at what things may look like using the initial claims data.

Unemployment rate = (7.14 million current + 16.78 million new + those not yet filed) / 162.913 million labor force.

If we assume there are no more claims (not gonna happen) the unemployment rate would be about 14.7%

If we assume another 8 million in the next two weeks total the unemployment rate would be about 19.6%.

How High Will the Unemployment Rate Rise in April?

On April 6 in How High Will the Unemployment Rate Rise in April? I came up with an unemployment rate of 21-22% in a more detailed manner, but also with more assumptions about how many jobs in various categories will be lost.

Leisure and Hospitality jobs will get crushed. I expect close to 12 million jobs lost in that class by itself.

Household Survey Caveats

The household survey is not hard data. Rather it is a phone survey. The BLS asks people if they worked any hours in the reference period.

If they say yes, even if it is 1 hour, thay are considered employed.

And with the small business loan program, people might get paid even if they did not work, and that would be counted as working.

Also, I wonder if people will say they did not work even if they did out of fear of losing the $1,000 checks going out to everyone. The two are not related, but it could impact how people respond.

Reference Period

The reference period for the household survey is the week that contains the 12th of the month.

For April, that is the week of April 12-18.

There are two more weeks of initial claims coming before the next jobs report, but that will not matter because the unemployment number is not at all based on claims.

The claims will rise, and even though they are outside the reference period, what matters is how people answer the survey, not whether someone filed before the reference week.

Thus, the survey will be reasonably accurate with the caveats I noted above.

Ugly Numbers

We have some hard numbers, and those numbers are ugly. With two more weeks of claims coming, we are already at the 16.78 million level. If we do get another 8 million claims in the next two weeks, we are roughly looking at an unemployment rate near 20%.

How Fast a Recovery?

Eventually, the coronavirus depression will subside. But what will America look like when it does?

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

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

Note that Vehicle Sales Plunge by 5.5 Million Units, Most Since 1987.

With the stock market down and consumer savings wiped out, will car sales quickly recover?

The same question applies to eating out and airline travel. Simply put, a quick return to business as usual is not in the cards.

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

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

Comments (30)
No. 1-14
Herkie
Herkie

To add to the unemployment misery there will be millions of retired that had their nest eggs slaughtered who are going to feel compelled to reenter the work force to try and make up for some of the damage to their portfolios. Yeah, some lost just a little, but a decent percentage lost a lot. And because they are only trying to make up for some of the losses employment will not be the only or even major source of income, so they will work for less. Fine. I read way too many advice requests at reddit from 20 somethings that want to know how to save for retirement on their 100k plus salaries. Those days will be over. Well, we may all make 100k plus, but with the inflation we will get good luck trying to live on it.

Six000mileyear
Six000mileyear

MISH, I had similar estimates for the present unemployment rate. I projected 25% unemployment rate by the end of April based on 5 million new unemployment applications every week. 25% unemployment was about the level during the Great Depression.

I don't expect a return to normalcy to begin until late June, which is 4-6 weeks past the expected peak in Hartford CT. The stay at home order should not be lifted until ALL areas have passed their peaks.

Duncan Burns
Duncan Burns

Good thing the country was shutdown on shit IMHE data.

PecuniaNonOlet
PecuniaNonOlet

So that is 20 million people not making bank deposits, 401k contributions, social security and payroll tax, local income tax, federal income tax, sales tax, mortgage payments, utilities payments, credit card payments, oh and shopping. And the market is up again today? Heck we need to fire everybody so Dow can go to 60k!

Tony Bennett
Tony Bennett

It seems PPP (Paycheck Protection Program) portion of CARES Act not working according to plan.

Well, no fear, the same folks who said PPP would save jobs are assuring me they will be hired back quickly once the V Recovery leaves the launch pad shortly.

njbr
njbr

From the CBO (Congressional Budget Office)

....The unemployment rate underlying the cost estimate for H.R. 6201 was 12 percent in the second quarter of 2020. The extent of social distancing was a key factor in that projection. The analysis incorporated an expectation that the current extent of social distancing across the country would continue—on average, and with local variation—for the next three months. That expectation was broadly consistent with the projections of the virus’s spread that have been reported by the Administration’s coronavirus task force.

CBO’s projections also included the possibility of later outbreaks of the virus. To account for that possibility, social distancing was projected to diminish by only three-quarters, on average, during the second half of the year. And CBO expected the effects of job losses and business closures to be felt for some time; the unemployment rate underlying the cost estimate was 9 percent at the end of 2021.

Tony Bennett
Tony Bennett

"Simply put, a quick return to business as usual is not in the cards."

...

Debt overhang.

Way too much unproductive debt floating around from households / business / state & local govts. How is this debt being serviced NOW? Need to know that answer before anything. No doubt many will seek some sort of forbearance ... and likely get some sort of delay. But, I doubt, will there be much in way of forgiveness. Just tacking fees / interest onto principal, which only makes debt burden more onerous going forward. Try servicing that when looking for job / rebuilding business.

No V recovery. At all.

davebarnes
davebarnes

Things are looking up.
Only 6.6M this week compared with 6.8M last week.
A huge decrease in claims.
I am sure that Fox News will be all over this.

Casual_Observer
Casual_Observer

I'm reversing my take on what U-3 will be. I expect single digits because a lot of people will work at least 1 hour and/or take money from the government which which won't allow them to be counted. Especially small businesses. Large corporations will use credit facilities to avoid layoffs.

Jojo
Jojo

Watching the local news this morning, I see one church featured in San Jose, CA that is a food distribution point. They claim they are giving away 16,000 boxes of food/day.

As the camera scanned back and forth over the cars in line (wait between 60-90 minutes to get one box), I could not help but marvel as to how many relatively new looking cars there were in line!

Then there are all the sob stories of people who live paycheck-to-paycheck and have no savings. The stress must be through the roof for these people.

PecuniaNonOlet
PecuniaNonOlet

And no one wanted Bernie sanders? I guess the Republican party is the new socialist communist party now comrades. Where does that leave Democrats?

RonJ
RonJ

Martin Armstrong has this unemployment chart, going back 100 years, with trend lines and a projection line that looks like it could be intersected, considering the current situation.

vultra1
vultra1

All a kung flu hoax and this is the result...A phlebotomist working at Roseland Community Hospital said Thursday that 30% to 50% of patients tested for the coronavirus have antibodies while only around 10% to 20% of those tested have the active virus. You call Denniger a fool but he has nailed it from Day 1 and you should read up on his Here Comes a Revolt on how the R0 factor was decreasing before jelly belly pritzker even opened his mouth...and now the liberal mayor idiot is pulling a Cuomo screaming with her hair on fire that Chicago will need 40k beds IGNORING the model...how else is she going to bring the predators of the south side to heel, as the wonderful Clinton would say.

GoodTimes32
GoodTimes32

We're definitely holding out hope for a resilient bounceback, V type recovery with the employment and housing market. When we come out of this, employers and employees alike will need to recalibrate their approach to efficiently make money in this new normal we'll likely be facing. Our business has slowed, but there is still a need for the trades/service type businesses even in these uncertain times. https://www.handymantoledoohio.com/


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