Impossible to Sugarcoat the Disastrous Unemployment Claims

Mish

For the 8th week, continued claims were near or above 20 million.

Disastrous Continued Claims

Initial claims rose by 1.48 million but continued claims at 19.52 million tell the real story.

Continued Claims Historical Perspective

Continued Unemployment Claims 1970 - Present June 25

Initial Claims

Initial Unemployment Claims in 2020 - 2020-06-25

Not a Leading Indicator

Initial claims are touted as a "leading indicator". 

They aren't much of one if indeed anything at all. 

The Myth of the V-Shaped Recovery in One Chart

In case you missed it, please see The Myth of the V-Shaped Recovery in One Chart.

Life Support

20 million people out of work for 8 straight weeks tells the real story: 

This economy is on life support of $600 monthly Federal unemployment insurance due to run out this month.

IMF Assessment

Even the perennially late IMF is beginning to catch on. 

It's a Crisis Like No Other: IMF Downgrades US GDP to -8.0%

Mish

Comments (36)
No. 1-12
Sechel
Sechel

If we had properly shut down and come up with a testing strategy we'd be on the mend now like Germany but instead we're looking at more potential shut-downs

EndTheFed
EndTheFed

There are many other pitfalls besides the $600 per week unemployment supplement coming to an end on July 25th. How many businesses are paying their employees with PPP grants that otherwise would be laying off those same employees if they had to pay wages out-of-pocket? Or the airlines who can't make significant layoffs until October due to the terms of their bailout? My guess is these stimulus programs will be extended until at least after the election in one form or another, masking the true gravity of the unemployment situation.

Tony Bennett
Tony Bennett

"20 million people out of work for 8 straight weeks tells the real story:

This economy is on life support of $600 monthly Federal unemployment insurance due to run out this month."

...

Not just the $600. PPP for many about to end. I know they extended it to 24 weeks, but that was near the end of 8 weeks for most borrowers so likely much of loot already spent. And the variety of moratoriums / forbearances ending soon. What makes many of these doubly bad is lender many cases want lump sum or payback plan over short term.

People who missed 3 straight mortgage payments have ability to pay it all back with 4th month payment??

LawrenceBird
LawrenceBird

Mish - Why are you leaving out the 728K PUA initial claims? And the 11M continuing PUA claims?

tokidoki
tokidoki

Don't worry, Trump's gonna cut funding soon so that people can not:

  1. File for unemployment.
  2. Receive unemployment benefits.

It's gonna be like his approach to testing. If it's not looking good, just cut funding.

njbr
njbr

...Edward I. Altman, the creator of the Z score, a widely used method of predicting business failures, estimated that this year will easily set a record for so-called mega bankruptcies — filings by companies with $1 billion or more in debt. And he expects the number of merely large bankruptcies — at least $100 million — to challenge the record set the year after the 2008 economic crisis.

Even a meaningful rebound in economic activity over the coming months won’t stop it, said Mr. Altman, the Max L. Heine professor of finance, emeritus, at New York University’s Stern School of Business. “The really hurting companies are too far gone to be saved,” he said....

....Mr. Altman expects at least 66 cases with more than $1 billion in debt this year, eclipsing 2009’s mark of 49. He also predicted 192 bankruptcies involving at least $100 million in debt, which would trail only 2009’s record of 242

Robert J. Keach, a director of the American College of Bankruptcy, said many companies had so far managed to put off bankruptcy by amassing cash and conserving it as best they can: drawing down existing credit lines, furloughing workers, delaying projects and taking advantage of federal and state pandemic-relief programs.

But when those programs expire, the companies will start burning through their cash. That’s when bankruptcy filings are likely to soar and stay elevated, Mr. Keach said.

Expect “a Covid-19 cliff” in the next 30 to 60 days, he said.

Companies that received loans under the federal Paycheck Protection Program may be waiting to file, said Mr. Keach, who practices bankruptcy law with the firm of Bernstein Shur in Portland, Maine. The loans can be converted to grants if the companies meet certain requirements, and if the borrowers can put off bankruptcy until they’re sure they won’t have to pay the money back, they will have more cash when they file.

IA Hawkeye in SoCal
IA Hawkeye in SoCal

I've been repeating this and I stand by it to this minute. There will be no more shutdowns, and the first was a horrible economic mistake. It's our immune systems job to fight this, not the Government. Do not expect any more shutdowns as the mental health toll is worse than the virus.

Augustthegreat
Augustthegreat

to be honest, I really thought that the CoronaVirus would magically disappear in April.

njbr
njbr

Realist
Realist

I have to give Trump credit: he has managed to damage the the economy, causing unemployment to reach levels unseen since the 1930s, and blow up the deficit and debt to unheard of levels, all without slowing the virus. Now that is talent. He gives Americans the worst of all worlds.

Meanwhile, other developed countries like the UK, Germany, France, Spain, Italy and Canada have reduced cases by 90+% and are slowly opening up again.

It gives new life to the term American Exceptionalism.

pauldoc99
pauldoc99

If we stop counting initial and continuing claims, the numbers would look much better. Zero even!

NavyMan2516
NavyMan2516

Should have never shut anything down. No worse than the flu for most people. Do nothing: 2 million die; shut down economy: everyone dies. Life is full of risks and this irrational overreaction to C-19 will lead us to the Greatest Depression ever that will kill more than the silly virus.


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