Heaven Help Us if Unemployment Follows the Path of the Great Recession

Mish

Here's a series of charts showing the duration of unemployment followed by a comparison to what happened in the Great Recession.

Lost Jobs Stay Lost

The chart shows a sharp decline in the number of people unemployed 5 weeks or less. 

Unfortunately, that was accompanied by a sharp rise in the number of people unemployed for 5-14 weeks. 

Then the number of people unemployed for 15-14 weeks took a sharp decline. 

Now, the the number of people unemployed for 15-26 weeks is sharply rising.

Percent of People Unemployed by Duration

Percent of People Unemployed by Duration August Jobs Report

Of Those Unemployed

  • Of those unemployed, the percentage of people unemployed for less than 5 weeks topped at 61.9%. That percentage is now 19.6%. 
  • Of those unemployed, the percentage of people unemployed for 15-16 weeks rose sharply to 39.6%.

Number Unemployed by Group

  • Less Than 5 Weeks: 3,202,000
  • 5-14 Weeks: 5,169,000
  • 15-26 Weeks: 6,484,000
  • 27+ Weeks: 1,501,000

Number of People Unemployed by Duration 2000-2020

Number of people Unemployed by Duration 2000-2020 August Jobs Report

That red line is very ominous. Let's hone in on what happened during the Great Recession to see why.

Unemployed by Duration During and After the Great Recession

Number of people Unemployed by Duration Great Recession

Great Recession Comparison Key Points

  • The number of people unemployed for 15-26 weeks in the Great Recession peaked at 3,488,000 in June of 2009. That's when the recession ended. 
  • For over a full year, the number of people unemployed for 27 weeks or longer kept rising. It peaked at 4,988,000 in October of 2012 over a year after the recession ended.

Once people hit 15 weeks of unemployment they stayed unemployed for 27 weeks or longer.

Already we at 6,484,000 unemployed 15-26 weeks vs a max of 3,488,000 in the Great Recession.

What If?

If the unemployment trends follows the path of the great recession we will easily have over 10 million people unemployed 27 weeks or longer by the time this mess clears up.

That is not a prediction, it is an observation based on current data.

I do have one prediction and it is not a pretty one.

The number of people unemployed 15-26 weeks is nearly guaranteed to rise in the next jobs report and perhaps the next several jobs reports. Continued claims shows why.

Continued Claims

Continued State Unemployment Claims in 2020 August 6 Report

The BLS reference week for the latest jobs report was July 12-18 at 16,951,000 collecting unemployment.

That was nearly month ago. Continued claims have proven to be stubborn. 

Heaven Help Us

Another 4 weeks will pass between jobs reports. So potentially millions more will will roll into the 15-26 week category from the  5-14 week category, now in a steep decline.

If the number of people rolling into the 15-26 category is 1,500,000 or greater, which seems likely, the next jobs report will show 8 million or so people unemployed 15-26 week.

Then in two months, those unemployed 27 weeks or more will start ticking up rapidly.

Heaven help us if unemployment 27 weeks or longer continues for a year after the recession ends. 

But that is what happened in the Great Recession.

Panic at the Fed

Yesterday, I noted Yet Another Fed President Supports More Free Money and a Covid Lockdown

Three Fed presidents have now called for more free money from Congress.  

Two of them support hard lockdowns of at least 4 weeks.

If that remotely sounds like panic, it's because it is panic. The Fed is not in control. 

It is only an illusion that they ever were.

Gold's Response to Free Money

Gold has responded and rightfully so.

For discussion, please consider Gold Soars to New High Above $2000 While Managed Money Sat it Out

What about the US Dollar? I am, glad you asked.

For discussion, please see Are the Commercial Dollar Traders Early, Wrong, or Neither?

Mish

Comments (59)
No. 1-20
Sechel
Sechel

We've never had a recession cause by a pandemic in this country. We're in uncharted territory. To be going through a pandemic with an ineffectual President an a legislature that isn't rising to the task is unprecedented but how how that impacts economic activity is anyone's guess. There's no comparison. All we know is it won't be pretty.

randocalrissian
randocalrissian

Getting back to how life was in Summer of 2019 might take us a decade, if we can ever get back to the old normal.

PecuniaNonOlet
PecuniaNonOlet

84 days till election.

With retail being totally destroyed during the pandemic coupled with a large percentage of restaurants and bars wiped out, it is going to be tough to get back to “normal” in any sense of the word. Tourism is in a coma as well. Manufacturing moved overseas and the president to make america great again has failed at just about everything.

The lasting effect is what scares me. Think of all the family owned restaurants whose kids are going to say, “my dad had a great restaurant but then the pandemic wiped them out.” Either government or private capital will need to step up to encourage a new crop of risk takers and entrepreneurs. Most people getting wiped out are likely too old or demotivated to start from scratch again.

IA Hawkeye in SoCal
IA Hawkeye in SoCal

"Heaven help us" is exactly correct. History has shown time and time again, when people drift too far from God and his rules, that He will realign things until people come back to Him. And that's exactly what is happening. Pastors are saying that they are ministering more now than they have in years. It's easy to drift away when times are good and people get distracted. But what do people do when they get desperate? They pray. What is the best way for God to get people's attention? It's to take everything away from them until they get their minds right.

Control is an illusion, we never have been in control and never will be. Your "control" can change at the drop of a hat.

Philippians 4:6-7

6 Don’t worry about anything; instead, pray about everything. Tell God what you need, and thank him for all he has done. 7 Then you will experience God’s peace, which exceeds anything we can understand. His peace will guard your hearts and minds as you live in Christ Jesus.

God is not an ATM that "gives you what you want" when you pray to Him, but He always gives you what you NEED. Your understanding of your needs is imperative.

numike
numike

Who cares about all this?? The stock market is up up up!!

njbr
njbr

The depth of the problem that the US faces with the virus is due to the denial of expertise of which Trump is the current apex. Prayer to a god is fine, but actual logical approaches to the problem would be better.

No-one, including God, ever promised you an easy life or prosperity. We have lived in a historical aberration here in the US from WW2 on--and it has been clear that many of the things that were assumed to be true about life in the US require hard work, sacrifices, good luck and cooperation to fulfill.

Tony Bennett
Tony Bennett

"Three Fed presidents have now called for more free money from Congress."

...

Greece-esque bailout ... for their masters ... aka The Big Banks.

So obvious that Tsipras bought off when he would agree to a $200 billion bailout ... and some $185 billion would go straight to Northern Europe banks ... leaving a pittance for the populace.

Fed officials beseeching Congress for free money is the only way the bottom 80% will have funds to stay current on debt obligations.

Instead ... Let the banks ... and their rich shareholders / bondholders ... Eat It!

AWC
AWC

Of course, the Fed is harping on Con-gress to spend more. It’s the Fed’s shadow mandate to print whatever con-gress spends. And all that newly created money is processed by the Fed’s owners, the member banks. And, naturally, it’s “Fees all the way down.” Got bonuses to extract, and shares to buy back, you know?

Seems the Potent Directors just can’t grasp the idea that economies are self organizing structures, and can’t sustainability be switched on and off like a light. They also can’t thrive in captivity, and will ultimately, under those conditions, atrophy.

KidHorn
KidHorn

Our economy is never going to be the same. Retail is dead. Who in their right mind would open a retail store? Inventory that can be stolen and the police will do nothing. High rent. Better to have a warehouse and deliver goods. Maybe let who you want to stroll through the warehouse. Restaurants will switch to carry out and delivery. Why dine in? High rents and paying waitresses and dish washers. If you want a place to sit, sit in your car. Maybe have a covered shared picnic bench area in the parking lot.

ksdude69
ksdude69

I don't know what all the fuss is about we're only at 10% unemployment. HAHA

kurtellis
kurtellis

If anything like last recession past 6 months long term unemployed become unemployable. Especially if over 50. Your resume goes right in the trash without a glance.

Bungalow Bill
Bungalow Bill

The longer they continue benefits, the longer people take their time looking for a job.

channelstuffing
channelstuffing

It took less than a decade for the US to go from a tier1,1st world economy to know a bankrupt,insolvent,3rd world banana republic,that's got to be some kind of record!

tokidoki
tokidoki

Another online company, Etsy reporting a blowout quarter. So what if people are unemployed. They have tons of money.

On top of the FAANGS, we now have Shopify, Etsy, all sorts of online channels having blowout revenues and earnings.

No doubt this will rub some less intelligent people wrong. ROFL.

Party goes on.

RonJ
RonJ

"Lost Jobs Stay Lost"

How many businesses have been canceled by the Covid shutdowns? Sweden took a different route.

Six000mileyear
Six000mileyear

My company has done salary freezes / reduction, furlough, early retirement buyouts and recently layoffs for salaried employees, and now early retirement buyouts for unions members. When all is said and done there will be more than 10000 layoffs in my business unit alone. Our other business unit across town is getting hit hard as well. Both business units rely on local machine shops for major production. There are still many, many more layoffs in the pipeline; and they are not going to be cancelled if a vaccine for COVID19 is found tomorrow. There is just too much capacity in the airline industry for the next couple of years. September / October is going form a second peak in the initial unemployment claims.

Casual_Observer
Casual_Observer

Once they get past 40 weeks the problem is solved. They don't count. Unemployment is destined to go down.

debracarter
debracarter

response to IA hawk comments above.
How many of you in the great depression were from the south, Bible belt, or believers, in 30/40's ? Becareful. God bless 🙏📝 Looks like some people, stop believing, & said " where were you?". Not much talk about that. I think they not dare, & are quiet. Religion is being tested to a maximum!

jiminy
jiminy

Long term unemployment was driven (in2007-08) by extended benefits. My sister in law collected for two years in California.