Huge Spike in Long-Term Unemployment

Mish

The percentage of those unemployed for 15 weeks or longer spiked to 5.0% in July. And it will be much worse next month.

Long-Term Unemployment 1950 Through August 2020

Long-Term Unemployment 1950-Present August 2020 Report

What's Going On?

The above chart shows long-term unemployment is typically a very lagging indicator. This happens because layoffs increase as recessions grow in length. 

U1 is 15 weeks or longer so it took this long to kick in. 

BLS Reference Period

The BLS reference period for the household survey which sets the official unemployment rate is the week that contains the 13th of the month.

The reference period for the July Jobs report thus reflects conditions July 12- 18. That is about 15 weeks from the start of this mess.

U-1 Lag

In every instance since 1950 the U-1 Unemployment rate peaked well after the recession was over. 

It is unprecedented for U-1 to jump this fast. Normally businesses cut hours, then more hours before mass layoffs begin. 

The huge spike in July reflects the immediate economic shutdown.

Number Unemployed 5 Weeks or Less

Number Unemployed 5 Weeks or Less August Report

Number Unemployed 15 Weeks or More

Skyrocketing Unemployment 15 Weeks or Longer August 2020 Report

Continued Unemployment Claims

Continued State Unemployment Claims in 2020 August 6 Report

As noted on August 6, Continued Unemployment Claims Are Still Above 16 Million.

For the August report (due September 4), I expect those unemployed 15 weeks or long to spike above 10 million.

If so, that would exceed the previous record set in the Great Recession.

Number Unemployed 27 Weeks or Longer

Number Unemployed 27 Weeks or Longer August Report

27 weeks is a key number to watch because most state unemployment benefits last 26 weeks. 

I estimate we are another 6 weeks away for that to happen.

Ominous Setup

  • Over 30 million people are on pandemic assistance.
  • At least 16,107,000 people are not working any hours.
  • An additional 15,201,678 people do not qualify for state unemployment insurance but have been collecting $600 weekly assistance checks.
  • An unknown number of those 15+ million are working part-time.

Pandemic Checks Stopped

On July 25 the Clock Ran Out on $600 in Weekly Unemployment Benefits as Republicans and Democrats bickered over the next round of stimulus.

On July 29, Trump announced "So Far Apart on Covid Deal That We Don't Really Care"

On August 5, I commented Trump Weighs Imposing His Stimulus Plan, Constitution be Damned

Those 30 million people will miss there second $600 weekly check tomorrow.

Talks between Republicans and Democrats over continued pandemic benefits have stalled.

It is likely that any deal will be retroactive, but meanwhile, many millions have no means in which to pay their bills.

Mish

Comments (52)
No. 1-10
tokidoki
tokidoki

"many millions have no means in which to pay their bills."
Where's the proof?

I am not seeing the supposed mass eviction, mass bankruptcy, etc. Is everything great? Absolutely not. But we are doing fine. Better than expected.

Tony Bennett
Tony Bennett

NFIB:

The PPP loan application is set to close on Aug. 8 after Congress extended the deadline to allow more small business owners to participate. Most small business owners (71%) have used their entire PPP loan. However, 46% of borrowers say they anticipate needing additional financial support in the next six months.

Some small business owners (21%) have or anticipate having to lay off employees after using the PPP loan.

Almost half (46%) of PPP loan borrowers also anticipate needing additional financial support over the next 12 months.

About 23% of small business owners report that they will have to close their doors if the current economic conditions do not improve over the next six months.

Another 22% of owners anticipate they will be able to operate no longer than 7-12 months under current economic conditions.

Sechel
Sechel

AP story says it all.

WASHINGTON (AP) — The United States added 1.8 million jobs in July, a pullback from the gains of May and June and evidence that the resurgent coronavirus has weakened hiring and the economic rebound.

At any other time, hiring at that level would be seen as a blowout gain. But after employers shed a staggering 22 million jobs in March and April, much larger increases are needed to heal the job market. The hiring of the past three months has recovered only 42% of the jobs lost to the pandemic-induced recession, according to the Labor Department’s jobs report released Friday.

Mish
Mish

Editor

"many millions have no means in which to pay their bills."
Where's the proof?"

Good grief.
The checks just stopped!

Other factors: millions making more being unemployed than employed

Forbearance plans

It will take at least a short while for this to kick in.

Then you will have your proof.

PecuniaNonOlet
PecuniaNonOlet

This two minute clip from Armageddon perfectly encapsulates our situation.

Earth faces total annihilation.
Clueless president orders bomb to detonate, Bruce Willis (Fauci) trying to save the world...

Buscemi puts icing on cake, “Yeah man its all wrong we should even be up here.”

ksdude69
ksdude69

For those hit the hardest........is eating retroactive?

IA Hawkeye in SoCal
IA Hawkeye in SoCal

Community College. Get retrained now and be as ahead of the curve as you can.

Casual_Observer
Casual_Observer

In classic 1984, the stock market struggles with unexpected higher than expected jobs. How can we get to Nasdaq 20k unless we have less job creation and more stimulus ?

Casual_Observer
Casual_Observer

I actually think jobs will return more quickly then the great recession. Many unemployed people will turn to stock trading as a career. At this point they have nothing to lose if they cant find a job anyway.

lol
lol

That would certainly explain the boom in prison construction,every state is rapidly expanding it's prison space,they see what coming...here!