New Unemployment Claims Top 2 Million for 10 Straight Weeks

Mish

Initial unemployment claims for the week ending May 23 were 2,123,000. That's the 10th week claims topped 2 million.

Ten-Week Total 

The ten-week running total of initial claims is 40.732 million. 

However, some of those workers have been called back as states have opened. Also some people submitted claims and were not really eligible. 

Continuing claims paint a better picture at this point as to what is happening.

Continued Unemployment Claims

Continued Unemployment Claims 2020-05-28

First Dip in 9 Weeks

Continued claims lag new claims by one week. They took their first dip in 9 weeks. 

For the week ending May 16, continued claims were 21,052,000 down from 24,912,000 for the week ending May 9.

BLS Reference Week

The reference week for the BLS Household Survey unemployment report is the week that contains the 12th of the month. It is that week's survey that determines the unemployment rate.

For the May Jobs Report coming out Friday, June 5, the reference week was May 10 through May 16.

Household Data from April Jobs Report

Household Survey April 2020

As noted on May 9, there was a 6.4 Million Discrepancy Between Employment and Unemployment.

The BLS is very aware they published a bogus unemployment number for April and issued this notice.

If the workers who were recorded as employed but absent from work due to “other reasons” (over and above the number absent for other reasons in a typical April) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been almost 5 percentage points higher than reported (on a not seasonally adjusted basis). However, according to usual practice, the data from the household survey are accepted as recorded. To maintain data integrity, no ad hoc actions are taken to reclassify survey responses.

Data Integrity

To maintain "data integrity" the BLS reported a number known to be bogus. 

There is still more to this BLS fiddling saga. 

Click on the preceding link for details about Seasonal Adjustments and  an unusual statement regarding their Birth-Death model adjustments.

Unemployment Rate Calculation

For a change, we have a solid reference point on which to make an advance estimate of the unemployment rate.

If we assume the number of unemployed is roughly equal to the number of continued claims (likely +- a few million) and we also assume the BLS will do a better job this month of elicting the correct answers (questionable), we can calculate the unemployment rate as follows:

Unemployment Rate = (Unemployed / Labor Force) * 100

UR = (21.052 million / 156.481 million) * 100 = 13.5%

If so, that would be down from 14.7% in April. 

The equation makes an additional assumption that the Labor Force will not change much and the BLS does not further mess with their Birth-Death model.

Given the assumptions, a range of 12%-17% seems about right.

Regardless, there will be a long road to job recovery as noted by recent reports.

Boeing is the Tip of the Layoff Iceberg

Please consider Boeing is the Tip of the Layoff Iceberg

Yesterday, Boeing announced over 12,000 Layoffs in the wake of plane cancellations and dearth of new orders.

Also note 114,327 Retail Job Cuts, Most on Record, as More Stores File Bankruptcy.

Retailers Pier 1 Imports, JC Penney, J. Crew, and Neiman Marcus have all filed for bankruptcy. 

Malls in general are dying. 9,300 stores closed in 2019, breaking the record of 8,000 store closures in 2018. According to Coresight Research, another 15,000 stores could close in 2020.

The energy and service sectors are also hard hit. 

How many people will soon go back to their old ways of dining out as much, going to the movies, getting their nails done, singing karaoke?

Fed Can Print Money But It Cannot Print Jobs

That's a nice saying but I did not come up with it. I can find at least three instances dating back to 2010.

Belts and Suspenders

However, I can claim a sarcastic Don't Worry, the Fed has Belts and Suspenders

Unfortunately, all the Fed is doing is creating zombie corporations unable to survive expect with permanently low interest rates.

Grim Economic Data

  1. May 8: Over 20 Million Jobs Lost As Unemployment Rises Most In History
  2. May 15: Retail Sales Plunge Way More Than Expected
  3. May 15: Industrial Production Declines Most in 101 Years
  4. May 15: GDPNow Forecasts the Economy Shrank by a Record 42%. It's 40.4% as of May 28.

Ripple Impacts May Last Years

The economic data has been grim and the ripple impacts may last for years.

Global COVID-19 Risk Ranges Up to $82 Trillion

To understand the total global risk, please see Global COVID-19 Risk Ranges Up to $82 Trillion

Ripple Impacts

For a detailed synopsis of the state of the economy and the ripple impacts, please see The Economy Will Not Soon Return to Normal: Here's Why.

Mish

Comments (32)
No. 1-12
ToInfinityandBeyond
ToInfinityandBeyond

But the stock market will and isn’t that the same as the economy. Our president seems to think so. Keeps all his rich cronies happy.

Tony Bennett
Tony Bennett

"For the week ending May 16, continued claims were 21,052,000 down from 24,912,000 for the week ending May 9."

...

This number needs to be watched closely in the coming weeks. The most recent initial claims for week ending May 23rd ... if you go back 8 weeks from then its the week straddling March / April. CARES Act passed late March and early April business rushed in - crashing website be damned - to claim PPP loot before it ran out. In the next month (imo) expect business to lay off some workers here to now protected by PPP. As it stands now (unless Congress makes changes) those businesses who lay off workers now will have to pay back some of PPP loan.

Tony Bennett
Tony Bennett

"The economic data has been grim and the ripple impacts may last for years."

...

The revisions (Jan / Feb) were brutal today in durables (both Total and Core). "Suggests" economy on not so sure footing prior to covid.

Tony Bennett
Tony Bennett

Before I leave ... found this interesting ... tick tock tick tock ...

...

Standard Chartered analysts said in a note Wednesday that negative rates could occur in the event of a disappointing economic rebound and exhaustion of other policy options.

“We doubt that the Fed expects a small venture into negative territory would provide enough stimulus to offset the negative impact on banks lending and disruption of short-term money markets.”

Englander suggested that dropping 50-100 basis points below zero would trigger a significant fall in yields on the benchmark 10-year Treasury note, along with easing debt-servicing pressures.

Standard Chartered analysts believe this would likely send Treasury yields to all-time lows across the curve, potentially taking the 10-year negative, especially since the policy action would likely be taken against a backdrop of a bleak economic outlook and rising deflation risks.

jivefive99
jivefive99

In a 50/50 election year, with Trump's numbers about to be contrasted to the 25% unemployment rate of the Great depression, you can take it to the bank that the political appointees at the top of the Labor Dept will find some way, ANY way, to make sure Trump's unemployment rate will not exceed 25% ... no way in heck. I'm thinking they are now gonna push this "well, 20 million people have gone back to work already (where exactly?) and, so, the unemployment rate is really 10-12% in June," they'll say.

njbr
njbr

The economy was on a banana peel at the beginning of the year. And yes, the majority of the recent damage was due to a self-inflicted shutdown.

But that's what happens when you have a guy in charge that refuses to acknowledge what is coming (economic or health), and doesn't put serious efforts into heading it off.

IF, in an alternate world, a good leader had 2 months to seriously prepare, don't you think we could have adopted a lot of things that our asian allies did to minimize health effects and shutdown lengths and costs and do a full on press to find out as much as possible about the virus and gather supplies?

But no, a Labradoodle breeder was put in charge of our response.

And here we are.

JustDaFactsJack
JustDaFactsJack

Mitch McConnell, after happily ladeling out $3 trillion in borrowed largesse to his big corporate donors, has suddenly rediscovered his phony deficit concerns when it comes to helping average everyday Joes and not fat-cat donors. Voters will remember this in November, and it will bring an end not only to the Trump administration but also the GOP Senate majority.

Herkie
Herkie

Here in Florida ABC Tampa just dedicated most of the evening newscast just to the deficiencies of the UI system here. It was actually very factual and emotional, fewer than half of the people that applied were approved, and tens of thousands who wanted to apply have simply been unable to. You can't get through on the phone and even when you can the people state employees say they do not have the authority to do what is needed, the phone center seems to be staffed with people who have never even heard of unemployment. They interviewed people that spent all day every day for weeks trying to get through before just giving up on ever getting UI. The system was designed ($80 million) by Toilet and Douche (which contributed millions to the governor's election), designed to fail and reject the majority of claims. Governor (head up Trump's ass) DeSantis claims that it is not the states fault, when filling out applications for UI nine out of ten applicants fail to complete the application. So, I have to ask never having applied for UI in Florida, how fucking complicated is the process that 9 out of 10 people can't do it? If you can't complete the form then maybe it should be done in person and NOT online.

One way to keep costs down and to avoid a high er unemployment rate; just don't answer the phone at the UI office. Or tell them you can't help them when you do answer the phone.

The fact that the RATE of new claims is dwindling is no surprise. Most people that were vulnerable to unemplyment have already been let go. In fact I am surprised it is still as high as it is. These numbers have been so high that it SHOULD go down till it hits 250k per week again. If it goes up rather than drop before we get back to that level then watch out, we are in real trouble.

Webej
Webej

Official continuing claims are the tip of the ice berg. Tons of people are ineligible or are employed casually or in the informal economy, all forced into desperate straits. How about the people whose hours or wages have been cut? These numbers do not express the magnitude of what has happened.

Montana33
Montana33

I know you don't like to predict stock markets, but I wonder if you have an opinion about a second stock market swoon? My brokerage account values are back to where they were in January, and it's surreal because the economy and our future prospects are so much worse. I know it's institutional investors buying the momentum and closing out shorts because they don't want to fight the Fed money printing machine. I suppose if the Fed keeps printing money then stock markets will go up despite all the economic damage? Fundamentals are really dislodged from reality now.

Stuki
Stuki

"Unfortunately, all the Fed is doing is creating zombie corporations unable to survive expect with permanently low interest rates. "

Not just Zombie corporations.

Just as destructively, Zombie people. Pretty much the only people "making money" in America today, are people doing nothing. Or, even worse: Engaging solely in the only thing their lack of aptitude and ability affords them the opportunity to do: Pure, destructive makework which any three year old could do better.

Those increasingly few Americans who still cling to trying to create, produce, invent or bring to market anything of value; as well as all those with sufficient intellect, aptitude, comprehension and work ethic to do any of those; are robbed by debasement, taxes, rules, regulation and arbitrarily interpreted arbitrary "laws," until they are no longer even remotely competitive. Even with “competitors” as hopeless as communist five year planned ones.

All in order to ensure a free shit army of nothing but welfare collecting, rank, straight up, idiots; get to sit around doing absolutely nothing useful whatsoever, while "making money off their home" and "portfolio," or from court abetted frivolous shakedowns or "insurance" against such, or entirely unearned usury rents, or what have you…. If it destroys value, makes America and Americans poorer, more clueless and stupider, and doesn’t take even basic reading comprehension, it will make you money. The Fed and government will see to that. By paying for it all, with loot straight up stolen from those dwindling few who still bother to try being something other than just pure, parasitic vermin.

Six000mileyear
Six000mileyear

Getting people off unemployment has two goals. This first is obvious, so the state doesn't have to continue paying benefits. The second is more subtle. Once a person has returned to work, they must re-qualify for benefits. This can take 9 to 15 months. Given the expectation of a 2nd wave in the virus and more unemployment/furlough, states are trying to minimize unemployment benefits paid out.


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