Continuing Unemployment Claims Tell a Bleak Story

Mish

Continuing unemployment claims top the 20 million mark yet again.

Continuing unemployment claims lag initial claims by a week, but the former provides a better look at what is happening now. 

For 7 consecutive weeks, continued unemployment claims have topped the 20 million mark.  

Historical Perspective

Continued Unemployment Claims 1970-Present 2020-06-18

Continuing claims only topped the 5 million mark in the depths of the Great Recession.

They have now topped the 5 million mark for 11 consecutive weeks, and the 20 million mark for 7 weeks.

Initial Claims 

Initial Claims 2020-06-18

Initial Claims Not a Leading Indicator

Initial claims are normally considered a leading indicator. In this case, they certainly aren't.

The huge surge in initial unemployment claims is the past. Continuing claims tell the present.

Initial claims peaked at 6.867 million 11 weeks ago, They have fallen to 1.508 million but continued claims are barely dropping.

For discussion of initial claims, please see Unemployment Claims Dip But Remain Stubbornly High

The importants fact is continued unemployment claims have topped the 20 million mark for nearly two months.

V-Shaped Nonsense

Any notion that 20 million people will soon return to work at the same number of hours as before is nonsense.

Retail Sales

Earlier today I reported Retail Sales Surge Most on Record But Number is Misleading.

  • Retail sales surged a greater than expected 17.7% in May but the numbers are still well below the pre-pandemic levels.
  • Despite the surge, sales numbers are back to levels seen in late 2015 and early 2016.

People got money and spent it, but they also skipped mortgage payments and credit card payments.

What happens when the checks run out?

Manufacturing Tells the Same Story as Claims 

The Fed's Industrial Production and Capacity Utilization puts a big negative spotlight on the emerging V-shaped recovery thesis.

The Myth of the V-Shaped Recovery in One Chart

Industrial Production, Manufacturing, Motor Vehicles

For discussion, please see The Myth of the V-Shaped Recovery in One Chart.

Housing Recovery Not Much to Crow About

Finally please note Housing Recovery Not Much to Crow About

Housing starts are near 6-year lows and less than January 1959 levels.

So retail sales present one picture, but manufacturing, industrial production, housing starts, and continuing claims over 20 million tell another.

Mish

Comments (27)
No. 1-10
tokidoki
tokidoki

Kudlow will say that this thing is bullish!!!

Lance Manly
Lance Manly

It is too bad that the billionaires that the fed is pumping money to can't spend it fast enough

channelstuffing
channelstuffing

In a permanently collapsed economy with what is basically full unemployment for well over a decade,no real private sector left just govt,2 things will happen, one like all bankrupt 3rd world banana republics the US will collapse in civil war starting with a TeT style offensive to overthrow the corrupt DC junta or martial law!

Blurtman
Blurtman

Golly, how did everyone lose their jobs?

CautiousObserver
CautiousObserver

According to President Trump today, the recovery is better than "V-shape." It is more of an "I-shape" (vertically straight up).

I will say one thing about the President; no superlative is big enough for him. He consistently needs to turn the knob to "11."

Realist
Realist

It’s going to take a very long time to get employment back to where it was at the beginning of 2020. Given that the pandemic is still spreading throughout the US and the world, and that government subsidies will begin to wear off over the second half of this year, things could easily get worse.

Once a vaccine (or several of them) start being used in 2021, it should allow for a long slow recovery over the remainder of this decade (assuming that enough Americans are willing to take a vaccine).

I still expect zero economic growth overall for this decade.

ColoradoAccountant
ColoradoAccountant

Recently in Colorado a man was convicted of the murder of his girlfriend on nothing but circumstantial evidence, no body, no witnesses, nothing but the obvious. Given the obvious, the Chinese were doing gain of function on bat viruses, like human to human transmission. It leaked out and the world is compromised. Circumstantial, but obvious. Is 6 feet apart proved, or is it obvious? I don't think either.

TimeToTest
TimeToTest

This is like watching a train coming down a tunnel. You can see the light but the danger is still off in the distance.

Manufacturing is what will end this depression.

ReadyKilowatt
ReadyKilowatt

Sounds like a great time to start a business. Too bad no one in charge wants that to happen. Better to continue propping up existing businesses, even when they've failed.

Advancingtime
Advancingtime

The size and pace of Fed balance sheet expansion have put a floor under global equity markets and driven equities higher. Yet Powell is going out of his way to signal that more economic support is on the way. The problem with market manipulation is that once it starts, where does it end?

This has forced even the most bearish of us to finally concede that, for whatever reason you want to claim, the Fed under the leadership of its Chairman J. Powell has crossed the Rubicon and the point of no return. More on this subject in the article below.


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