20 Years of Employment Gains Have Vanished

Mish

On Friday the BLS will issue the jobs report for April. It will be miserable, but how miserable?

Let's explore a couple of Tweets with possible answers.

Unwind 20 Years of Job Creation

Bloomberg estimates an unemployment rate of 20%. 

Based on 30 million recent claims, I estimated an unemployment rate of 21%.

Initial Unemployment Claims 

Initial Unemployment Claims in 2020 - 2020-04-25

For details please see Upcoming Jobs Report: What Will the Unemployment Rate Be?

If we subtract 30 million jobs as I did in the lead chart, the employment level would be the similar to that in 1997. 

Bloomberg estimates 1999. 

Five Caveats

  1. Just because people filed and unemployment claim does not mean they qualify according to BLS Household Survey guidelines.
  2. The reverse also holds true. People may qualify for unemployment without filing. Gig workers in particular fall into this category.
  3. Household Survey uncertainties: See The BLS FAQ on the Impact of the Coronavirus Pandemic on the Employment Situation for March 2020
  4. In the Household Survey if you work as little as 1 hour you are not unemployed.
  5. The Covid-19 Relief Act may impact claims but not the survey.

An employment level somewhere between 1997 and 2000 is a likely range.

My numbers are for the Employment Level (from the household survey), not the Nonfarm Jobs total which is the establishment survey.

Deflation Coming - Blame the Fed

The decline in employment is a very deflationary event from both a price standpoint and a credit destruction standpoint.

For discussion, please see The Problem is Not Deflation, It's Attempts to Prevent It

Mish

Comments (15)
No. 1-10
anoop
anoop

Does anyone care about employment numbers or the economy? The most important thing is -- how is the stock market doing? The S&500 is showing a roughly 300% gain since its March 2009 lows.

El_Ted0
El_Ted0

These numbers won't even include the phantom-unemployed, getting paid via PPP 'loans', but not legally able to actually work.

Sechel
Sechel

This is a short term number and a bit artificial since companies are literally barred from being open but what will be the new natural unemployment rate once the economy reopens? It won't be like before? Can easily see 10% or more, but I have no real model to base that on.

tokidoki
tokidoki

So you telling me, the stock market will go up to 400K and beyond?

get
get

Mish,

Steve Blumenthal is suggesting deflation first and followed by inflation which is what I expect as well. I also think we could see deflation in some areas and inflation in others. Car or real estate prices will fall while (some) food categories inflate.

How does this fit with your outlook?

Casual_Observer
Casual_Observer

Maybe this is the end of the true secular bear market that started in 2001. It is typically characterized by major deflation and a return to below normal valuation.

NY Geezer
NY Geezer

Contrary to the message "we are all in this together", we are not. The message is as much a lie as "weapons of mass destruction" in Iraq.
The actions of government show that a lifeboat is now essential to our survival but it is much too small for all of us. Therefore. survival must be prioritized. A government that prioritizes jobs, workers and the businesses that employ them acts differently than one that prioritizes banks, finance, landlords, bondholders etc. Guess what our government's survivor priority is.

GoodTimes32
GoodTimes32

We're working with numerous small businesses that have applied for the SBA loans, but many have not received anything. For true small businesses, this makes it even more challenging to keep their employees on the payroll. Tangible support needs to be there for small businesses.. (not just support for medium to large businesses) after all, small businesses make up nearly 50% of our GDP. https://www.businessconsultingcharlotte.com/

stephanbraun
stephanbraun

When Students say can someone to write my essay for university assignment.So i say always to students. I provide the best academic writing help online at cheap price.