Week 3 of the Collapse of the US Labor Market

Gut-wrenching. The hope is that most people will be rehired as the health crisis becomes more manageable and lockdowns are loosened.

By Wolf Richter for WOLF STREET.

More – and previously unimaginable – gut-wrenching data about the lockdown-economy: 6.606 million people filed initial unemployment claims in the week ended April 4, seasonally adjusted, about ten times the prior peaks during the prior crises in 1982 and 2009, according to the US Department of Labor this morning. This is in addition to the 6.87 million claims a week ago (upwardly revised by 219,000 claims) and 3.3 million claims two weeks ago. Combined, this makes for nearly 16.78 million unemployment claims processed in three weeks.

State unemployment offices have ramped up staffing in their claims processing departments to catch up with the tsunami of claims, and they have beefed up their websites that have crashed periodically under the onslaught, and they’re still behind processing the claims. What we’re seeing today is the only portion that they were able to process.

And there are still uncertainties about the implementation of the expansion of eligibility for unemployment insurance that was part of the stimulus package signed into law on March 27. So these are mostly people who are eligible to file for unemployment insurance under the old rules. And the tsunami of initial claims will continue for a while longer.

This chart, going back over four decades, puts the suddenness and magnitude of the current collapse of the job market into long-term perspective:

The 11 states with the most initial claims this week.

The table below shows the 11 states that had the most initial claims for unemployment insurance in the week ended April 4. I extended the list to 11 because I wanted to get Florida into it because in its comments (listed further below) it joined Texas as the only two states that mentioned “agriculture” among the industries with large unemployment claims:

The 11 States with the most Initial Claims in week ended Apr 4
1 California 925,450
2 Georgia 388,175
3 Michigan 384,844
4 New York 345,246
5 Texas 313,832
6 Pennsylvania 283,718
7 Ohio 224,182
8 New Jersey 213,897
9 Illinois 200,940
10 Washington 176,827
11 Florida 169,885

Industries and states:

Some of the states provided comments about the industries that the layoffs were concentrated in. Here are the comments from the states with the largest number of unemployment claims. Note the breadth of those industries:

California: Services industries.

Michigan: Manufacturing, construction, retail trade, administrative, support, waste management, and remediation services, and health care and social assistance industries.

New York: Accommodation and food services, retail trade, and health care and social assistance industries.

Texas: Accommodation and food services, manufacturing, other services, health care and social assistance, administrative, support, waste management, and remediation services, professional, scientific, and technical services, arts, entertainment, and recreation, information, mining, agriculture, forestry, fishing, and hunting, retail trade, real estate rental and leasing, construction, transportation and warehousing, and management of companies and enterprises industries.

Pennsylvania: Construction, administrative, support, waste management, and remediation services, and accommodation and food services industries.

Illinois: Other services, accommodation and food services, and retail trade industries.

Florida: Agriculture, forestry, fishing, and hunting, construction, manufacturing, wholesale trade, retail trade, and other services industries.

Washington: Accommodation and food services industry.

North Carolina: Layoffs in the health care and social assistance, administrative, support, waste management, and remediation services, accommodation and food services, and other services industries.

Alabama: Layoffs in the accommodation and food services, health care and social assistance, manufacturing, administrative, support, waste management, and remediation services, professional, scientific, and technical services, arts, entertainment, and recreation, educational services, and construction industries.

Number of “insured unemployed” soar to record

The above numbers are the “initial claims” of Unemployment Insurance (UI). A week after they filed, and if the people are still unemployed, they are added to “insured unemployment.”

The number of “insured unemployed” soared to 7.45 million. The report added: “This marks the highest level of seasonally adjusted insured unemployment in the history of the seasonally adjusted series. The previous high was 6,635,000 in May of 2009.

As more people will file for unemployment in the coming weeks, and as the unemployment offices catch up with the surge, these gut-wrenching numbers are going to balloon further.

The hope is that most of these people will be rehired by their old employers as the health crisis becomes more manageable and as lockdowns are gradually loosened. That’s the hope, and we’ll cling to it.

When the unemployment crisis exploded onto the scene three weeks ago, sales totally collapsed. What’s in store for the industry? Read... How Lockdowns Hit U.S. New & Used Vehicle Sales: Beyond Ugly

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  261 comments for “Week 3 of the Collapse of the US Labor Market

  1. David says:

    Money for the gig economy? How do even manage that? So if I still have a job and I have two side gigs does that mean I can go get money? How do you even validate what’s a job or what is a side gig?

    • Wolf Richter says:


      If you get a W-2, it’s a “job.” If you get one or more 1099, or if you get paid without a 1099, it’s a “gig” (well such as self-employed, contract worker, etc.) Gig workers can get unemployment insurance under the new rules.

      So if you have one job and two gigs, and you lose one of your two gigs and want to file for unemployment, you’ll have to work that out with your state unemployment office, I’d say.

      • Just Some Random Guy says:

        I doubt someone in that scenario would get UE benefits. UE is pretty much an all or nothing proposition. Either you have no income and you get UE benefits, or you have some income and you get nothing. This has always been a problem since it discourages the unemplyoed from working part time or a second job to supplement UE benefits.

      • Jeff Relf says:

        Wolf Richter wrote:
        > if you have one job and two gigs,
        > and you lose one of your two gigs and
        > want to file for unemployment,
        > you’ll have to work that out with
        > your state unemployment office, I’d say.

        I lost a gig I had with the ABA ( ABA.COM )
        in Washington DC; I live in Washington state.

        Do I file in my state, or in Washington DC ?

        • Steve says:

          File in Washington State. Interstate compacts allow States to work this type of scenario all the time.

        • Jeff Relf says:

          Steve replied ( to me ):
          > > I lost a gig I had with the ABA ( ABA.COM )
          > > in Washington DC; I live in Washington state.
          > > Do I file in my state, or in Washington DC ?
          > File in Washington State.
          > Interstate compacts allow States
          > to work this type of scenario all the time.

          Interesting, thanks.

        • Bob says:

          You could also file in DC. During the GR, we moved from DC to MN right after by wife lost her job. She filed in DC. With direct deposit and online weekly submissions it wasn’t an issue.

        • Bob says:

          Working for that body is likely cause for you to reconsider your fitness within the corporeal plane.

      • Mike says:

        If the US or large portions are reopened in May 1 as planned, since that will magnify the coming peaks in other states and cause more counties to get epidemics, this number of unemployed will later seem minor. That is even if the alleged possibility of re-infection is zero.

        However, Xi may lose power if the numbers of infected explode again. I guess every pandemic has a silver lining.

      • Portia says:

        This is the information i have in Vermont for the self-employed:

        ” Self-employed workers — including those in the so-called gig economy — do not qualify for traditional jobless benefits because they do not pay taxes into the state unemployment fund. State officials estimate that between 40,000 and 60,000 Vermonters, as much as 17 percent of the state’s workforce, fall into this category.

        These workers will be eligible for unemployment benefits under the federal government’s $2.2 trillion coronavirus relief package. But first, the Trump administration has indicated that states will need to individually set up separate unemployment systems to process all the new claims, according to Vermont Department of Labor Interim Commissioner Michael Harrington.

        Vermont officials had been awaiting further guidance since President Donald Trump signed the federal bill into law on March 27. Those details finally arrived late Sunday night. The state has since directed MTX, a company already under state contract, to start building the new claims system, Harrington said. But he warned that the feds are asking for a “monstrous lift.”

    • Roger Lagerfeldt says:

      Maybe there Will be a second, third, fourth,,, way of corona. Everybody expect it be finished soon

      • WES says:


        South Korea is studying virus recovered people who seem to have the virus flare up again.

        • Paul says:

          Be interesting to see if they were not fully cured, or maybe got sick with a mutation or different strain??

  2. Marc says:

    The above claims are just the beginning. States just received the Federal instructions for implementing Pandemic Unemployment Insurance, for the self employed. It is retroactive, and will take a week or two for states to implement. The Federal Instructions can be downloaded at:


    • Marc says:

      In Oregon last week, 100,700 new claims were filed. 56,646 were processed and reported by the US Dept of Labor.

  3. Joe Lalonde says:

    Last year, I took early pension which is very small but at least it is a steady income and I have no more hoops to jump through.
    If I waited, and tried today, their is no way all these other claims coming in, I would get it.

    • RD Blakeslee says:

      Joe, 46 years ago my situation was similar to yours. Wait awhile to retire, for more money per month? No.

      Many times over the years I have decided a money question according to my values. When I bought our big old mountain boundary where we have lived for 43 years, the locals thought I paid too much, but my valuation was higher than the price.

      Several years of my life were spent here in my private Eden, instead of in the rat race waiting for more money.

      When you hear “time is money”, think how that would sound to you on your death bed.

      • Frederick says:

        Don’t feel bad RD, the locals always think we paid too much Thats because they’ve lost conception of inflation and are still thinking of yesterday’s values Nowadays it’s easy to do I’ve noticed this phenomenon since I first started buying properties in 1977

      • Lisa_Hooker says:

        I was fired from a great corporate job in the culling of 2009. Fortunately I had previously owned businesses over the decades, which teaches cash management. I took the unemployment money for the first time in my life, supplemented it with savings, and stayed afloat. Unemployment ran out and I retired. Home is in the middle of a large forest preserve and was well worth preserving.

        • Clete says:

          Lisa, you’re doing it right.

        • Yancey Ward says:

          I did exactly the same thing in 2009. Best decision I ever made.

        • Beardawg says:

          I built and live in a 100% OTG house in a large mountain town as of July 2019 – what a Godsend. Money is just money. Until you gotta have it for food / clothing, then your home (shelter) is your castle – and you can build it any way you like. In the USA, anyone who wants free food or clothing can get it.

      • Dave Kunkel says:

        I’ve learned over the years to never make important decisions in life based on money. If it’s the right thing to do, the money will work out.

      • 91B20 1stCav (AUS) says:

        RD-check, check and check re: living, really living, by your values, and that that money, though useful stuff, is a poor raison d’etre.

        Ref: local views-When I was in the Spokane, WA area in the ’90’s, I initially remember locals at social gatherings exulting over the amounts they had skinned the immigrants from California and Texas for real estate. Five years on I remember those same locals bemoaning the fact that their children could no longer afford that selfsame property, without acknowledging their not-inconsiderable part in that situation.


        May we all find a better day.

      • Clete says:

        Thanks, RD.

      • Jos Oskam says:

        Thanks, RD

        When I bought my old dilapidated ruin in the middle of nowhere in France, everybody and his dog told me I was crazy.

        That has stopped now, all of a sudden ;-)

        Living in a completely locked-down country still isn’t my idea of a good time, but compared to a city apartment or suburban backyard, seclusion in a remote part of the countryside feels like paradise.

        Your remarks remind me of one of my late mother’s favourite sayings: “Money is not important, what you *really* want to have can’t be bought anyway”.

  4. Lance Manly says:

    The best thing that has been done is to kick up unemployment benefits for the hard working people that are losing their jobs through no fault of their own. It will help them and keep the local economy afloat. OTH, the idea that the Fed is going to be buying junk bonds from corporations who went into debt to inflate the c-suites incomes… Makes me want to puke.

    • Jdog says:

      You do realize this is not free money right? The government is taking out a loan in the taxpayers name, and then will have to raise taxes to pay for the loan. Over the next decade or two, the amount you are going to pay in increased taxes will dwarf whatever benefits you received in unemployment benefits…

      • Gene says:

        Modern Monetary Theory: debt doesn’t matter. Gov’t debt does not have to be repaid. I don’t agree with it. In fact, I’m angry about it. I’m a Keynesian (I remember Econ 301 and Paul Samuelson’s textbook). Keynesian theory makes sense to me, the only problem being that politicians can never find the courage to raise taxes even in good times. I’m amazed at how quickly MMT has been accepted. You don’t even need taxes; they’re viewed as a means to punish. Maybe we’ll see galloping inflation or hyperinflation.

        • Jonas Grimm says:

          Or just go back to barter economy. That seems to be the trajectory we’re on.

        • Thomas Roberts says:

          There’s only 2 possibilities to get rid of US debt.

          It’s important to remember that us citizens own majority of US debt. But, it’s better to lose that particular money completely and have US economy be strong, than to have weak economy with hugely devalued dollars.

          1. Large inflation “hyper inflation is unlikely” that erodes size of debt over time. This is the possibility we are drifting into.

          2. Default on most or all US debt, this is smarter option, especially if we can get EU, japan, and other counties to join in, in order to keep global economy going, because it’s only like 10% of debt and will help keep us dollar strong, we could still payback all the developing countries like Brazil.

          If we go with option 2, we have to raise taxes to no longer ruin a deficit. This should be easier as interest payments on debt adds up to roughly 500 billion a year. With option 2 if we do it very strategically and act more fiscally responsible in future, we could maintain US Dollar as the one global currency.

        • Jdog says:

          No, it does not have to be repaid, but it does have to be serviced. Interest payments now make up almost 20% of the Federal Budget. If you increase the debt by say 30%, which they are well on track to do, then you either have to raise revenues or cut spending, and they sure as hell are not going to cut spending. At least not until they absolutely have to.
          People need to realize the government does not print its own money, it borrows it at interest. If it does not pay that interest, no one buys their Treasuries……

        • Paul says:

          Taxes are an important part of MMT.

          That is how excess money is made to disappear to control inflation.

          I must admit that for people who studied economics based on money that was tied to gold or silver, MMT is uncomfortable.

          Most of what we learned must be converted into tracking the wealth flows, not the money flows.

          With fake money, they can be very different.

      • Bobber says:

        The deficits are creating government debts that are purchased by the Fed and retired. This is no different than printing money to fund the deficits.

        Your comment is based on old rules that existed a decade ago. These rules have been completely rewritten.

        Ask yourself why Japan can function with a debt to GDP ratio of 400% or so. The explanation is that most of that debt is currently on the central bank balance sheet and effectively retired. The Fed is following the same model.

        Read about modern monetary theory to understand what the new rules are. The end result might be that the Fed can kick the can for many more years while asset prices inflate.

        Will it work in the long run? No way. The end result is financial socialism and cronyism as the government picks winners and losers. It creates too much moral hazard.

        In the near term, though, shorts are getting their heads whacked by this money printing.

        • Rcohn says:

          Japan has consistently run trade surpluses while the US has consistently run trade deficits.
          For those who argue that the US will follow the Japanese model, remember that both Japanese real estate and its stock market topped out in 1989 at levels far above current levels.

        • sunny129 says:

          Being SHORT doesn’t mean one always against the mkt! I am a tactical trader use options, leveraged ETFs – BOTH ways with some hedges and make $.

          Not easy for many. Been in the mkt since ’82 Lost nothing during GFC and Nothing since the beginning of this bear! Still on the PLUS side!

          After dive of 35% and back spike of 20%, the S&P is more expensive than ever b/c of plunge future earnings!

          Most people know how to make $ during BULL especially when there was perpetual Fed’s PUT. NOT during secular BEAR. Most are sitting ducks, losing profits and the capital.

          FOMO is still dominant than the Fear. So many will lose more than who lost during GFC!

          NO MORE FREE MKT just Fed’s directed orchestra! Reversion to the mean can be delayed but cannot banned for ever!

        • Jdog says:

          The Fed never retires the debts. I do not know where you get that from but it is wrong. Every Treasury the Fed purchases, it keeps on its books, and at some point has to be repaid. Which is why the Fed’s balance sheet is so enormous.
          The interest on those debts has to be paid, although the government often floats new Treasuries to pay off old ones.
          The debt never disappears, and always has to be serviced.

      • intosh says:

        They can print more money to pay for the loan. It has been shown that in this era, unlimited printing is no problem. Economics theory textbooks are wrong — they all need to be revised.

        • nick kelly says:

          Did I miss the sarc icon?
          You are joking right?

          Forget economics texts, try some history texts. Argentina, Zimbabwe, pre-war Germany, Italian lira etc. etc. etc.

          There is reason there are only about a dozen convertible currencies out of the 200 plus issued by the rest of the world. Most of their scrip won’t buy anything outside the country and is only taken as a last resort inside the country. But they sure print a lot of it.

        • intosh says:

          @nick kelly

          Establishing a parallel between the US and these cases in history is like a parallel of a jobless LeBron James to a jobless minor leaguer. The latter is probably suffering through instant noodles right now while the former will have no problem asking for a loan at a bank.

        • intosh says:

          Besides, the rest of the world, namely China and Japan obviously, needs US consumers. A significantly devalued USD is also their nightmare. So until China can rely mainly on internal consumption to sustain its economy (that will never happen in Japan), the USD is safe. It’s part of China’s plan but it won’t happen before the end of the next decade.

        • Cas127 says:

          “jobless LeBron James”

          Has lost the ability to make f*cking paper masks and a decent chunk of its population might “starve in place” in a few months unless a few heads are pulled out of a few *sses.

          But please, keep worshiping the magic money press.

          Which does not create a single real asset and actively works to discourage the creation of real assets in those lands subject to its benighted demesne.

        • Jdog says:

          Yes they can borrow more money, but they have to pay more interest. The books have to be balanced. Do you think they pay a fifth of every dollar they take in on interest because they want to?
          You cannot borrow your way out of debt, even if you are the government.
          Why do you think you had 90% top tax rates during the great depression and up to the 1980’s?
          It was because of the governments massive debts.

      • Harrold says:

        Thats not how it works. By lowering taxes you unleash the free market on the economy and the increased economic activity actually increases the amount of tax revenue generated.

        This was all explained 2 years ago when the huge corporate tax cut was initiated.

        • Nate says:

          This whole thing stinks like a private equity hostile takeover. Load your victim, I mean acquisition, up with debt, strip the assets via cherry picked sales and special dividends (see stock market) then bankrupt them.

          Here, I suspect they’ll aim at some version of corporate capital feudalism because what’s the point if you can’t push the serfs around?

        • Stuart says:

          “Unleash” ? Wrong. The Ruling Class takes care of itself and Damn everyone else. Why do you think the USA is the only rich country in the world without Socialized Medicine ? Even little Taiwan has Socialized Medicine.

        • Jackson says:

          B###S###. Unless you forgot the snark icon.

        • Wolf Richter says:



          Made my day. My kind of humor – bone dry and spit-out-coffee funny at the same time (OK, mixed metaphor, but it’ll do for now)

        • Ed says:

          Yes, there is an amount of taxes that maximizes the amount the government takes in.

          It’s somewhere between 0 and 100%! Unfortunately, it’s a curve, not a straight line, and, in the U.S., that maximum has never been lower than the current rate in the years people have, repeatedly and conveniently, claimed that the maximum is always to be found in the direction of lower taxes.

          Maybe this time! Or next! I think everyone knows it’s a fig leaf for doing something irresponsible.

          It’s too bad. I’d like the maximum government revenue to be somewhere under a 5% rate! If only.

        • nick kelly says:

          Next you’ll be saying that the Laughter Curve isn’t funny.

          Oh oh bad news. I hear Laffer has been exhumed to take a gov advisory role.

      • rhodium says:

        We’re long past paying back the debt bro.

        Don’t step on my face trying to get to the money spigot. Aw, but we shower underneath the aristocrats anyway.

        I’d love to generate some inflation if I had the means to do so. Come on fed help me out!

        • dawnsEarlyLight says:

          “Nothing better to killing capitalism than socializing losses and privatizing profits.”

          Nice line.

        • Wolf Richter says:


          Price inflation without wage inflation will wipe out what’s left of the middle class, not to speak of the bottom 40% that have already been wiped out by the price inflation we’ve had so far because they never got enough wage inflation to begin with.

          When consumers’ wages don’t keep up with price inflation, the economy is in trouble: stagflation would be a best-case scenario.

          But how are you going to get wage inflation in this environment? Be careful what you wish for.

          That said, this scenario of price inflation without wage inflation is now on the horizon.

    • David says:

      Over compensating people to not work is a losing game!

      This can’t end well!

      Hashtag: “KissTheUSGoodbye”

      • Lance Manly says:

        Jdog & David, did you read the whole post? The Fed is already overcompensating the c-suite

    • Lisa_Hooker says:

      Too many of the hard working people failed to prepare for the potential loss of their job. Economic inertia, the expectation that everything will simply continue. If you’ve ever been totally dependent on your own business you would understand. As for corporations that bought their own stock, same deal. They should go into receivership so that the assets can be managed by a different group of crooks.

      • mexp says:

        Indeed, why are companies not required to sell all of those stocks they bought, before getting taxpayers bailouts? A lot of corporations could then get through this crisis without needing to layoff people or government handouts. If they sold it, then those “stock buybacks” could be seen as putting away rainy day funds. But if they don’t sell them during bad times, then it just seems like the typical privatize profits socialize losses for the rich.

      • Shiloh1 says:

        Well you are right, but the part “as for corporations…go into receivership” that horse already finished ahead of Secretariat at Belmont.

        Heads they win, tails you lose.

        • Nate says:

          This whole thing stinks like a private equity hostile takeover. Load your victim, I mean acquisition, up with debt, strip the assets via cherry picked sales and special dividends (see stock market) then bankrupt them.

          Here, I suspect they’ll aim at some version of corporate capital feudalism because what’s the point if you don’t have the serfs to push around?

      • Gene says:

        People have been told lies for decades. GWB told US consumers to support the economy during 9/11 by going shopping. The patriotic thing to do was to go to the mall or buy a US made new car, heedless of debt. There was the Cash for Clunkers program. Seldom have people been advised to save for a rainy day. Emergency cash reserve: “What’s that? I can’t afford to save money.”
        Now, at the macro level, some advise the USG to purposely default, saying we’ll be fiscally prudent in the future. Yeah, sure.

    • DawnsEarlyLight says:

      “Nothing better to killing capitalism than socializing losses and privatizing profits.”

      • Sit23 says:

        You guys are all getting confused between Free market capitalism, which hardly exists, and Crony Capitalism, which about all that is allowed in USA.

    • Beardawg says:

      I am still having the dry heaves.

  5. Jdog says:

    I read that California’s unemployment insurance was only funded currently to pay claims at the current rate for 2 mos. before needing a bail out.
    If that is indicative of all the States, the Federal Government is going to have a massive bail out just for that. Add to that the Municipal and State budgets that are going to need bail outs, and this thing becomes a monster. At some point all this spending is coming right back to the taxpayers in the form of higher taxes. Much higher taxes.

    • HK says:

      Got any better option?

      • Gold is just..gold says:

        MMT? Oh, wait!

      • Greg Hamilton says:

        Let people go back to work.

      • Steve says:

        Stop paying your bills. If 100M families stop paying their mortgage, car Payments, etc. What are they going to do, send the collection man to 100M home? Hell he’s probable somebodies neighbor as he sure isn’t a 1%er.

        We can call it the “Common Person Supply Side Economic Stimulus Plan” (CPSSESP for those gobernant types). Just think of the purchasing power unleashed.

        Bigly Awsome.

        • Jonas Grimm says:

          They call that a debt strike. And it’s past time we organized one.

    • 2banana says:


      Why should fiscally responsible states bailout mismanaged states?

      Not one insane public union pension touched. Benefits for illegals. Insane business regulations. Banning of oil and gas production. Etc.

      Before you ask for a bailout, you need to take a hard look and where the massive amounts of taxes coming in are being spent on.

      “the Federal Government is going to have a massive bail out just for that.”

    • Lisa_Hooker says:

      The Fed is going to be buying state and municipal bonds. That will be interesting, especially for CA, IL, NJ, et. al.

      • crv says:

        The FED will be buying everything that might be worth something after the dollar collapses. That’s what all those trillions are for.

    • RD Blakeslee says:

      No way the taxpayers can cover it.
      It will be dishonored, probably through inflation

  6. MF says:

    “What we’re seeing today is the only portion that they were able to process.”

    This is what makes it so historic. It’s looking very likely we’ll exceed the levels of the Great Depression.

  7. Robert Lawson says:

    Florida is most likely severely underreported as the system is down most of the time. They are using paper forms as a backup.

    • Harrold says:

      I saw on the news that people were forced to stand in lines to fill out those paper forms. 2 weeks from now there will huge new numbers of cases of Covid-19.

      • lenert says:

        And fewer UI claims – problem solved.

        • timbers says:

          So Florida UI is working is intended. When the folks in DC have time perhaps they’ll make it the national model.

    • caticorn says:

      You are correct about Florida. Even if you can file, you are not able to make a request for a benefit payment before the deadline. What happens then? The systems for handling the mass of claims can never catch up and many will fall through the cracks creating even more problems.

      • Jackson says:

        Feature not Bug.

      • VintageVNvet says:

        Get a hold of your US Rep. At least Charlie is trying to do the right thing for us, and I suspect other US Reps that would like to be re elected in November are also trying to to the right thing.
        IMO, the UEI payments for this current situation, at least, will be made retroactive, if for no other reason than the fall election.

  8. Lisa says:

    So what percentage of people will be willing to go out to restaurants, theaters, concerts, or even to the mall when the government says: Okay it’s not too bad out there now, get back to your work and to your shopping — but we still don’t have effective treatments or a vaccine?

    • Saltcreep says:

      Probably quite a few, I would imagine, Lisa. People will be desperate to get out and do stuff again. Have you seen the video going around from China, showing the reopening a nature park that’s been closed, and people immediately surged along in vast crowds to get in? Personally, once my regular local pub reopens, I’ll be down there in a flash. That I expect is going to take many more months, though, and for a very justifiable reason, I would have to add…

      • Jdog says:

        There are two viewpoints on this issue. Those who do not take it seriously, and are only staying home because they have to, and those who do take is seriously, and would be staying home even if there was no order to do so.
        This thing is not going to end all at once, it will taper off slowly, or it will pick up once again once people begin to congregate.
        For those who do take this seriously, it will take some time before they feel comfortable being around other people.
        It is not much fun going to a restaurant or entertainment venue if you are worrying about getting sick.
        The point is, it is not going to return to where it was, and because most businesses operate on thin margins, it is going to mean allot of bankruptcies, and unemployment. That will translate into a lot of debt default and deflation.

    • Lisa_Hooker says:

      Is it part of a plan to kill off the old and stupid leaving the paranoid and prudent?

      • Saltcreep says:

        No, I agree with the current closure, but once we have a vaccine eventually, or the disease has been eradicated in this area, and they reopen (presumably based on sound medical advice), then I am very much looking forward to getting back to more usual routines again!

      • RD Blakeslee says:

        If that’s the plan, it won’t work with this ol’ boy, because he’s not stupid.

        • Lisa_Hooker says:

          Never thought you were RD. Should’a said old and weak. From what I’ve seen, a lot of the old are tougher than a lot of the current young.

        • TXRancher says:

          Maybe old and co-morbidly sick?

      • Nate says:

        Yep, makes u wonder. That would only benefit the powers that be too… how convenient.

      • IdahoPotato says:

        According to Bill O’Reilly, thousands of people dying is not too bad, “‘cos they were on their last legs anyway”. Now they will claim that it was an efficient way to “Entitlement Reform”. Kill off those who depend on Social Security and Medicare. So easy.

    • Escierto says:

      It will immediately precipitate a second wave of infections and deaths worse than the first wave. That’s the way these things have always played out before. Eventually everyone who can catch it will catch it but it will take a couple of years.

  9. Robert pyle says:

    How many are government employees?

  10. Deanna Johnston Clark says:

    Hi from boomer Grandma….Thank you, Wolf, for the caring and well defined articles you write.
    To everyone here I Pray for your well being. Keep your chins up…many of us will have to take our egos in our hand and do manual work or ask for help. I’ve done it many times… a whole new experience with new sorts of people. It can be a happy experience, believe me.
    Blessed Easter and Passover….

    • Frederick says:

      I did “Manual work” my entire working life even though I had a Bachelors of Architecture because I enjoyed building things and got a lot of stress relief from it Doing physical work never hurt anyone I prefer people who actually get dirty and create things over brokers, lawyers, bankers etc any day

  11. Mike says:

    And now the criminals that rule over us demand one world government.

  12. fledermaus says:

    The delusion of the stock market amazes me, as well has the near fanatical belief of the elites that everything will be back to normal by the 3rd quarter. I think a lot of it is due to the fact that they and their rich friends really are not affected much. It is service workers and small business that are most affected. Just of bunch of out of touch pollyannas

    • Lisa_Hooker says:

      It is different this time. Typically pollyannas are not greedy. Think vampires.

    • Phoenix_Ikki says:

      You and me both…welcome to the new normal, unemployment filed bigger every week and market is partying like it’s 1999. Fundamentals out the windows, FED saves the day, nevermind that millions of people are out of a job and don’t even have the pathetic $1200 checks and some might not even get it until August. Stock market has 5 mins attention span for bad news and that time has passed apparently on 3/27. Q1 earnings not even out, I predict if the numbers are not as bad as it seems, market will find a way to rally again and if it’s bad…there goes FED again, couple more T here and there and market back up again. Seriously someone should make a GIF of when Oprah was giving away free cars to the audience and paste Jerome Powell’s face over it…”You get a trillion…you get a trillion…”

      Maybe this is a rally before the next drop but as each day passes, my pessimistic side is telling me maybe this time is different and not for the better.

      • Mike says:

        I hear yay. The worse the news the more the market goes up. It looks like the FED now syncs their press releases whenever bad economic or unemployment reports are scheduled to be released.

        • KPL says:

          “It looks like the FED now syncs their press releases whenever bad economic or unemployment reports are scheduled to be released.”

          Yep. And guess what, market goes up! Let us see how long the Fed can keep this circus going.

        • Jdog says:

          Everything has 2 values, an intrinsic value, and a perceived value.

          Equities used to be valued as a potential buyer would value a business. Basically it was worth around 10 years of average earnings based on long term figuring both good and bad years.

          Today equities (and most other assets) are valued on their perceived value based on the growth in share price of the stock, with complete disregard for the companies actual earnings. Basically, the greater fool theory.

          People buy equities based on past performance, and the belief that they will continue that appreciation. That belief is not supported by anything except their belief.

          They believe the Fed has magic powers, and that they can keep the money for nothing scheme going forever.

          I am a skeptic. Every bubble in history has popped, and I cannot see any reason why this one will not follow the trend.

          I do not believe in religion, and that is what this belief in the Fed has become, a fanatical religion. It is not based on fact or reason, only what people believe based on an incomplete understanding of economics and history.

    • MD says:

      As Max Keiser points out, when everything is financially engineered you don’t actually need any tangible product or indeed workers.

      Money just makes money.

      I think Marx dealt with this in Das Kapital (the end point of capitalism just being money creation) but I’ve not read it so not sure if this is so.

      One could try just starting a company called ‘stockpump’ which does nothing at all apart from issue shares. Get lots of VC money involved and then IPO and see what happens. Quite a ride for about 72 hours probably. Would be interesting. Mind you, lots of cryptocurrencies have already implemented the UFC (Utterly Futile Company) and made their founders rich overnight so I guess my concept has already been proved!

      • Jonas Grimm says:

        You just described the South Seas Trading Company in a nutshell. It’s friggin’ insane that nobody knows their history. All this nonsense has happened before.

    • Dos Tacos Mas says:

      “The delusion of the stock market amazes me…” — Sorta reminds me of the scene in Blazing Saddles when Hedley Lamarr’s gang rides into the fake Rock Ridge. Sometime soon, the townspeople (us!) will descend on the gang and kick butt. Can’t wait to see what happens to us all as we crash into the Busby Berkeley-style top-hat-and-tails musical number.

      To be prepared, I ordered a Wolfstreet mug!

      • Clete says:

        “Somebody’s got to go back and get a s–tload of dimes.”

      • Wolf Richter says:

        Enjoy the “Nothing Goes to Heck in a Straight Line” mug. Much needed for times like this.

        • Art Vandalay says:

          I finally ordered a mug, in part because recent events seem to show that – yes – things can go to heck in a straight line.

          Unemployment is just stunning. With the extra $600 per week, I think (or hope) most will be able to get by if they can survive until the claims are processed, and with these volumes that seems a big if.

    • intosh says:

      It’s the typical pigeon syndrome. You no longer believe in the possibilities of threats and danger when you’ve lived so long in a “everyone wins” economy.

    • Jdog says:

      People only know what they have experienced. All people have experienced is a market that has temporary setbacks but has always risen during their life.
      They do not know or understand about 100yr long term cycles. They do not think they exist. What they think they know is the Fed and the Government can fix everything always..

      It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.

      • Zantetsu says:

        The U.S. government has actively worked to make the stock market the only place to invest money. As a result all money goes into the stock market. It’s where a good chunk of most people’s 401k savings are, and that’s one of the reasons that the government must keep the market always elevated, because it’s their only way to prevent lots of people losing their retirement savings. It’s kind of like privatized social security.

        This is why the government will do anything to keep the stock market up. They have to choose between sacrificing the next generation or sacrificing the last generation. Most of the rules are in the last generation so you can see which generation they have tilted the game towards.

        I try to explain this to my 12 and 13 year old but they don’t really understand how their grandparents generation is completely screwing them. I think someday they will understand, unfortunately.

        • Lisa_Hooker says:

          Funneling money into equities also helps prevent consumer goods price inflation by soaking up money. Same thing they did under Clinton in 1997-2000. Also see treasuries the Fed just sits on after they have matured and no longer pay interest. Money is sterilized.

  13. timbers says:

    The fact that Federal spending does not need to be financed by taxes.


    Please stop saying we will have to raise taxes to pay for federal fiscal spending and/or buying junk assets via Fed balance sheet.

    Fact is, most new fiscal spending is not financed by taxes but by borrowing. Ditto for Fed buying junk assets or anything else.

    The Fed can and has bought up the borrowed debt the Treasury issues and destroyed them.

    It has this ability because the U.S. has a sovereign currency, which in a way is a fancy way of saying Modern Monetary Theory (MMT).

    The above might be a bit off on the details ore finer points, but the fact that Federal spending does not need to be financed by taxes.


    • Wolf Richter says:

      Argentina has done that for years, no problem. Their central bank is part of the Ministry of Finance. It’s very efficient. Now have a look at the Argentine peso v. the USD to get a clue what that does to a currency as it gets destroyed by inflation.

      • Michael Fiorillo says:

        Yes, but wasn’t that much of that debt denominated in US dollars?

        Economic contraction and a weak peso combined with debt denominated in dollars makes for a nasty hangover.

        As long as the US dollar is the global reserve currency, fears of Argentina-style devaluation and inflation are a bit of a stretch. After all, we’ve been spending trillions on deluded military misadventures for decades; no one in Washington ever asked how we would pay for them, and the inflation called for by the theory never materialized.

        • Wolf Richter says:

          “Yes, but wasn’t that much of that debt denominated in US dollars?”

          They defaulted on their USD debt and destroyed the peso debt by destroying the peso.

          Argentina essentially finances part of its budget by creating pesos.

          If you sign a lease in Argentina, the amounts are in USD because no one trusts the peso. But you have to pay in pesos at the exchange rate at the time of the payment. So at 40% annual inflation and currency destruction, you’re paying for it out of your nose.

          I’m not saying we’re going to get 40% annual price inflation. But if we get 4% annual price inflation on average for five years, and no wage inflation, you can do the math of where this is going.

        • Cas127 says:

          “the inflation called for by the theory never materialized.”

          1) Do you know what the true “China Price” cost savings might have been for the past 20 years if not for the “debased dollar” inflation?

          2) Have you looked at home price/apt rent inflation over the last 20 yrs? ZIRP isn’t a free lunch.

        • Michael Fiorillo says:

          Wolf, given the immense demand destruction we’re seeing/will see, doesn’t that present a countervailing force to inflation?

          I’m not trying to presume to know (especially since I was wrong in thinking that post-2008 QE would ignite generalized inflation), just to point out other forces in play.

          Cas127, yes I’ve observed the rapid inflation in assets held by and accruing to the Overclass, but I just took that to be the predictable outcome of the class war Warren Buffett owned up to in 2005, not some law of physics. Cui bono, and all that…

        • Wolf Richter says:

          Michael Fiorillo,

          Agree. I don’t think we’ll be seeing a lot of inflation right now. But the effects of all this haven’t even kicked in yet. We will see some big structural changes in the economy when we come out of this, including supply destruction. And further down the road, a burst of inflation is definitely an option.

    • Jdog says:

      You seem to think the Fed is the government. It is not. It does not destroy the debt… ever. It is on the books and it has to be serviced.
      If you think the Fed has ever retired one cent of the Federal Debt, please show us an example…..

      • Zantetsu says:

        Didn’t Clinton pay some of the debt down?

        • Wolf Richter says:


          No. The debt kept increasing every year. However, the budget had a “surplus.” Big difference. I used to update and post this chart on an annual basis but somehow stopped doing it which was likely a mistake, given your question:

        • Lisa_Hooker says:

          No. Clinton balanced the deficit by “borrowing” funds from the Social Security surplus and giving Social Security non-marketable, off balance sheet, “notes.” That little trick is about to begin to unwind. Especially so now that unemployment will nail FICA collections to the wall.

        • Wolf Richter says:


          Good lordy, so much wrong in such a small space. So I’ll walk you through a few items:

          “…. balanced the deficit by “borrowing” funds from the Social Security surplus and giving Social Security non-marketable, off balance sheet, “notes.”

          “Deficits” and “budgets” are not impacted by “borrowing.” Budgets are the equivalent of an income statement (revenues minus expenses). “Deficits” means that there are more expenses (outlays) than revenues.

          Borrowing and debt are not part of the income statement. They are reflected on the balance sheet (assets, liabilities, and capital). Two very different things, as anyone who ever looks at a financial statement knows.

          “…Social Security non-marketable, off balance sheet, “notes.””

          Nope. First, no one “gives” the SS Trust Fund those securities. The SS Trust Fund invests in them, just like I invest in them.

          And second, those “non-marketable” securities are interest-bearing Treasury securities like all others, except they cannot be traded in the market. And there is a good reason for that: This way, fund managers don’t have to do the mark-to-market on a daily basis, which is irrelevant since the SS Trust Fund never sells them in the market anyway but keeps them until they mature, and then the government pays them off at face value. They’re listed as government debt and are added to the national debt, and are part of that debt.

          They’re part of what is known as “Intragovernmental Holdings,” which are Treasury securities that government pension funds and the SS Trust Fund, have invested in. You can look them up right here, center column, “Intragovernmental Holdings,” and they’re included in the right column, “Total Public Debt Outstanding”



          “Notes” is the technical term for bonds with maturities between 2 years and 10 years. So the 10-year US Treasury is the “10-year Treasury note” or for short, the “10-year T-note.”

          BTW, “Treasury Bonds” are those that have a maturity of 30 years (though there has been talk of issuing 20-year bonds, etc.). “Treasury bills,” or T-bills, are Treasury securities with maturities of 1 year or less.

        • Lisa_Hooker says:

          Mea Culpa. Thanks for straightening me out Wolf.
          Must have been typing too fast. Was thinking “budget” but typed “deficit.” Very big difference. I wrote note as in promissory note, not Note as in US treasuries. Poor syntax on my part. As for SocSec “investing” in these notes – I’m sure that they are totally independent from the rest of government and there was/is no pressure from the Administration. I guess they are just like the other US treasuries in the market – except they are not. I didn’t know the trick of not marking to market as they are a non-marketable note, much like banks and their collection of non-performing mortgages. For what it’s worth I have been trading US Treasury bills, notes, bonds and strips for over 40 years and do know the differences. I do thank you very much for your comments. Wolf Street and it’s commenters are an indispensible resource and you do a magnificent job of policing this place.

    • Bobber says:

      As awful as it sounds, you are correct. Deficits can be continually financed with printed money. The main side effect is that it creates inflation, which takes from the wealthy and gives to others, mainly debtors.

      It’s doesn’t immediately hurt the economy. It simply transfers wealth and creates an unfairness in the sense the recipients of the printed money have done nothing to earn it. In many cases the recipients have been imprudent and fiscally irresponsible.

      This is the biggest problem with the Fed’s current path. They are bailing out those who don’t deserve it. It’s not capitalism. It’s not socialism. It’s a bailout-based crony economy that rewards bad decision-making.

      The wrong people get the money.

  14. George W says:

    The few, the proud, the service worker…

    Ridiculous, Garbage jobs aplenty.

    The only threat to the US economy is if the US somehow runs out of credit. The US economy is debt, if no one is ever hired back it would be but a blip on a screen.

    Labor… I labored out to my mailbox to pick up my government check.

  15. Just Some Random Guy says:

    Why is this a shock? The govt (fed, state and local) forced millions of businesses to close. So no we have tens of millions of employees filing UE. Until the insanity of the lockdown ends this will continue. And you’re damn straight the govt should bail everyone out. You can’t have the govt preventing people from working or business owners receiving an income and then just saying, hey man, tough break. This is a govt created problem and they need to solve it.

  16. akiddy111 says:

    The S&P 500 has arrived back to a level it reached last June. Do i hear a round of applause for The Fed and the Treasury ?

    That newly created SPV must be feverishly busy buying up junk corporate debt today. Wash, rinse, repeat.

    God bless America.

  17. joe says:

    A lot of people are assuming things.
    I don’t know of anyone who got their “within 3 days” EIDL advance. I called and they have no idea when money will arrive for those in “the worlds longest line”. Hundreds of thousands of small firms applied for the PPP loans. Now the banks have to review the payroll records of all these firms. Everyone is waiting.
    Meanwhile employees are applying for unemployment with the PAU supplement since the small businesses have not received any loan money to be sure they can afford to pay them.
    And voila! They find they can make more money doing nothing (and perhaps a little cash work on the side).
    The situation will stabilize to: companies without workers going under while everyone hangs out on unemployment. NOT government loans saving businesses while we either go into a new virus wave or emerge from our bunkers.
    I think the government looks too happy having all this totalitarian power so who knows what happens. Only buy essential items or go to jail indeed. Look at Vermont.
    And look at idiot Gates who says we should not have any sports, concert, church, or other mass gatherings until a virus is administered to everyone. Maybe in 2 years or never.

    • Gold is just..gold says:

      Gates is not an idiot. He’s part of the 1% who wants total control of the masses (for our own good, of course)

      • joe says:

        OK. Gates is a rich arrogant evil person.
        There is a certain type of person who is so sure whatever they think is right, that they cannot rationally evaluate their own positions with respect to the possible range of error. There is always a potential range of error in a Gaussian distribution and potential for enormous damages.
        I have seen this many times. When proven wrong they basically latch onto any silly excuse, or nothing at all – I had one go “La La La” with her fingers in her ears.
        Gates just figures he can power through any contrary opinions or evidence with his money.
        He is starting to look like he has a messiah complex.

      • Steve says:

        Yup. Just for posting here you get the Wuhan vaccine. Now my buddy over here who sucked up to Gates, he gets the sugar water vaccine. See how it works.

        I’m only being partially facetious.

      • Tom Pfotzer says:

        What’s with the animus toward Gates? The man helped put a computer in every house. He’s donated a great deal of his money to help others, and he’s good at it.

        Pick your targets better. He’s rich because he’s really, really smart and knows how to work hard.

        He dropped out of Harvard to start Microsoft. That takes nerve. He built a huge business that changed the world. That takes skill. His company’s products always did, and still do, provide a lot of value.

        I don’t use any Microsoft products, btw. But I have a great respect for the man’s talent, and I’m not jealous / envious of him. I would, however, love to be able to contribute to the world what that man has. That’d be cool.

        • Michael Fiorillo says:

          As a public school teacher who endured years of his foundation’s bogus and intrusive panaceas, I can assure you that his “malanthropy” was never about “helping others,” and all about using the foundation’s non-profit (meaning taxpayer-subsidized) status to assert his personal and class will-to-power.

    • California Bob says:

      For the life of me, I don’t get the hate-on for Bill Gates. Years ago, he used to irritate those of us in the computer industry when he bragged about Microsoft’s ‘innovation’ when their business MO was to spot popular apps and either buy the company out, and roll it into Windows, or create an inferior app and, you guessed it: roll it into Windows (but I digress). Recently, Gates and his wife Melinda have dedicated their lives and much of their fortune to improving the lives of the disenfranchised; his one endeavor that was a rousing success that I’m most familiar with was curbing malaria infections in Africa by distributing millions of mosquito nets (a simple, inexpensive and brilliant solution).

      I’ve watched the recent interviews with Gates on CNBC and elsewhere, and they’re always started with the assumption that we want to ‘flatten the curve’ and mitigate the worst consequences of the pandemic. ‘Joe,’ and others here, seem to imply that we should just let the pandemic run its course–presumably they’ve convinced themselves they and their families won’t become victims–and get the economy going ASAP. This is a logical choice to make; many will die but many will survive and presumably have at least some immunity to successive ‘waves’ of the contagion (there likely will be). But here’s the rub: We get back to ‘business as usual’ and some die–2%, 5%, 10%, 20%; no one knows for sure–and we presume we’re past this particular contagion. But, in the process, the hospitals–already under-supplied and under-prepared–are exhausted and no more capacity is available for ‘run-of-the-mill’ problems like strokes, heart attacks, injuries, cancer treatment, etc. (this is already happening). Not mentioned, so far, are some of the ‘knock-on’ effects of this approach: Medical personnel, EMTs, ambulance drivers, paramedics, ER and ICU doctors and nurses, orderlies, janitors, cafeteria personnel will become afflicted and some will die and not be available to treat your current, pressing emergency. Others may seriously reconsider their career choices. In the long run, how many promising young people considering medicine will see how medical personnel, and their families, were considered ‘expendable’ in a pandemic, just to get the economy going again. How many will decide on careers as, for example, financier or banker instead (we sure need more of those, don’t we, and an MBA is a hell of a lot easier to get than an MD)?

      Bill Gates is a very smart man, and probably knows more about epidemiology than anyone on this forum from his philanthropic efforts. Bill and Melinda have committed much of their fortune and themselves–and convinced others, including Warren Buffett–into making the planet just a little bit better. I really don’t think putting the 99.999999% under his boot heel is his goal; he seems to have better things to do.

      • Zantetsu says:

        I’m pretty sure Gates fortune has not decreased one cent in all of the time you are saying he has dedicated his life to causes. I certainly agree that he has done a lot of good but let’s not pretend like he’s been willing to sacrifice any money doing it.

        I remember when Microsoft “gave away” copies of Windows for charity purposes and they were lauded for it. In truth all they were “giving away” was the cost of the pressed CD (and Microsoft used to have some incredibly elaborate pressed CDs because they were swimming in so much of our money that they didn’t know what to do with it) to charities that could not afford the monopoly prices they were charging everyone else.

        • California Bob says:

          re: “I’m pretty sure Gates fortune has not decreased one cent in all of the time you are saying he has dedicated his life to causes.”

          I’m sure you can prove that statement, no? I await your proof.

          My understanding is that the Gates’ have committed to give away the bulk of their fortune before they die, and/or leave most of it to the Gates Foundation to be doled out per their wishes after they are gone. I believe Gates has donated at least hundreds of millions, if not billions, of dollars to charitable causes, most for improving the lives of children around the world and to preventing and curing communicable diseases. Since the Gates’ created their foundation, Microsoft stock–which I suspect most of their fortune is invested in–has increased in price several-fold so, yes, his fortune has remained large. I have heard no indication he has reneged on his promise.

          Here’s an objective–British–take on the Gates’ efforts:


          Per the Gates Foundation website:

          “Total grant payments since inception (through Q4 2018): $50.1 billion”



      • Tom Pfotzer says:

        CA Bob: you beat me to it, and did a much better job of it.

        Thanks for showing some backbone.


      • Zantetsu says:

        Nanobots? LOL.

      • joe says:

        Not to belabor the issue, everyone has their opinion.
        But I worked through the DEC, Sun, IBM, Microsoft, Apple, etc wars and Microsoft under Gates was cutthroat.
        I’ve seen the same Gates interviews and I hear nothing extraordinary. Things like “no public gathering until there is a vaccine” do not sound workable. Like saying abolish the first amendment until a cure for the common cold. Extremes presented as declarations of truth do not impress me. Compare to medCram.
        What I worry about are the policy responses that result from the pronouncements of people like Gates who do not really know what is going to happen. Social and financial models have not been reliable. They should be working on gathering information necessary to make informed decisions if they want to be useful.
        We now have the Fed acting illegally outside of their charter. Local authorities deciding what constitute essential purchases – although I see no connection to disease prevention. Trillions distributed to incompetent corporations, businesses closed, and millions out of work. I don’t see this as a proportionate response. Absolutely measures need to be taken, but effective measures based on facts and not guesswork, not opportunistic grabs. And I don’t see Gates helping.
        I am always open to factual information and discussion and willing to change my opinion when presented with facts.

        PS: As to medical doctors. The doctors I know who used to have independent practices have been forced into subordinate employee type arrangements with insurance companies and hospitals. That is what they complain about. More of that coming as small businesses are force-ably closed.

  18. Dudu says:

    I’m waiting for RE to say “now is a good time to buy an average $500,000 shack because there is less competition between buyers”

  19. Lisa_Hooker says:

    “However, unlike standard fiscal programs, the increase in the deficit is not paid for by issuance of new government debt to the public. Instead, the Fed credits the Treasury with $100 billion in the Treasury’s “checking account” at the central bank, and those funds are used to pay for the new spending and the tax rebate. Alternatively and equivalently, the Treasury could issue $100 billion in debt, which the Fed agrees to purchase and hold indefinitely, rebating any interest received to the Treasury. In either case, the Fed must pledge that it will not reverse the effects of the MMFP (Money-Financed Fiscal Program) on the money supply.”
    – B. Bernake 2016

    “the Fed must pledge”. Can a Fed pledge be believed in 2020?

    • Jdog says:

      That rebate is highly questionable. The Treasury does not get back anywhere near what it pays, as the Fed get paid for its “expenses” which is why Ron Paul was always pushing to see where all the money was going.
      The fact is the Treasury pays interest to the Fed, and the Fed rebates what ever it feels like. The Fed is a private bank, it is not a government agency and it makes a profit.

  20. Paulo says:

    Canada lost 1 million jobs in March, which is probably about the same %age as the US loss which has not yet entirely been counted as mentioned in the article. But here is where the event differs.

    Instead of simply paying EI/UI claims for people to stay home unemployed, Canada is following the European model which is to pay 75% of an employee’s wage directly to the employer for a maximum of $867/week. This allows the employer to try and find work to keep employees busy, keeps people engaged and employed/connected with their employer, and hopefully will keep a work force tooled up and ready to go as things open up. Plus, the program is universal across Canada as opposed to a hodge podge of different states doing different things, specifically Florida which has extremely low UI benefits as a matter of politics.

    What does this look like on the job floor? I know a business owner who runs an import repair shop. He can now keep his techs busy rebuilding projects, which can later be sold. I also Know a small airline owner. He can now keep his maintenance department on the tools rebuilding an aircraft which can be brought back into service when things pick up, or sold to a different operator. Even restaurants are trying a stab at take out meals, and I noticed my friends pub/restaurant getting a power was and facelift as opposed to just shutting the doors. Business can use this subsidy to train, upgrade, whatever might be required. Furthermore, small business has access to interest free loans to help make this stuff happen.

    Hopefully, it all works (pun intended). Good luck, all.

    • MD says:

      Power wash and facelift? There’s a combo no plastic surgeon’s ever thought of before. Necessity truly is the mother of invention.

    • Paulo says:

      Hey, one more thing. (No facelift, honest).

      My 22 year old nephew and all his friends lost their jobs 3 weeks ago. He lives in Victoria, BC…couldn’t make rent, and went into lockdown. Then his grandpa just died. His whole world went into the shitter, but the saving grace was that he didn’t have a family to support or payments to make.

      Anyway…his employer just recalled him to work starting next Tuesday, because of the wage subsidy program. (We just got the message). Plus, his landlord contacted him and said to worry about buying food and getting his life back on track before coughing up the rent. (cough..I know poor choice of words).

      The program works. (I know, another poor word choice).

      I wanted to share some positive employment news for a change of pace.


      • Mr Wake Up says:

        Nice positive is good.

        Theres always something positive yin yang of live.

        Seen people getting laid off via malware zoom sessions.

        Many employers that struggled looking for quality staff pre virus might be able to secure post virus.

    • Zantetsu says:

      God I wish I lived in a first world country instead of the USA.

  21. Joe in LA says:

    I’m kicking myself for not buying back into the market the minute that Powell announced he would be buying commercial debt. I dithered.

    So, is everything in America just worth whatever Jerome Powell says? Now that 16 million people have claimed unemployment in three weeks, is there anything holding the DOW back from 30,000?

    • VeryAmused says:

      The world is under a holy @#$% stupendous mountain of debt. The CBs answer to keeping the debt tinder pile from igniting is allowing for even more debt.

      The only thing allowing this debt to be manageable is the constant churn of credit via consumption.

      Will there be a sustained, in the short to medium term, massive fall in consumption? I think the evidence is fairly clear that this is the case given all the crazy policy being put in place and the loss of jobs.

      Given this, can we pile on debt fast enough, though more credit and “UBI”, to outrun this massive fall in consumption? The fed appears to think we can and the market, for now, seems to thing we can. The government handing out large sums of money to the jobless makes me think it is a possibility.

      The uncertainty is mind boggling at this point.

      • Lisa_Hooker says:

        @VA – remember the old days when we called this “check kiting” and “paper hanging” and it was discouraged.

      • Bobber says:

        Yes, this could go either way. You could have more debt build up, wealth concentration, and low to negative growth. Or, you could have a deep recession or depression where the wealthy lose their wad and debtors get cleared in the equivalent of a national Chapter 11 proceeding. This second option provides a clean slate where growth and investment can happen again.

        In any case, people have been lied to, misdirected, pillaged, and just about every bad thing out there. I don’t see how the country avoids a revolution of sorts where the existing power structure is scrutinized. Will they be able to “spin” the narrative this time without making needed change? (i.e., with tripe such as “tax cuts pay for themselves”). Will they be able to find a suitable Boogieman? Will they be able to brainwash a group a loyal thoughtless followers? We will see. They’ve never faced a challenge like this one.

    • Fledermaus says:

      And that 16 million is only counting people who have been approved for UI. In my state they are still denying people who would qualify under the new rules because they haven’t updated the system for the changes. They say it won’t be ready until April 18th at the earliest. I wonder if the markets will still be so sanguine when faced with a 20% unemployment number

      • Just Some Random Guy says:

        Incorrect. The weekly unemployment numbers are of those filing. 16 million have FILED. Whether they are approved or not, doesn’t change the number who filed.

        • Wolf Richter says:

          We need to straighten out the terminology here.

          These numbers are the claims that have been filed and that have been processed. But many claims have been filed and have not been processed due to state labor departments being overwhelmed by this tsunami.

          Those claims that have been filed but have not been processed are not included here.

      • Just Some Random Guy says:

        Also UE rate isn’t based on how many people file or are approved for UE benefits. The UE rate is based on a survey done on a monthly basis. And the definition of unemployed is out of work but looking for work. Someone on welfare for 20 years for example who hasn’t looked for a job since 2011, is not officially “unemployed”. That’s where all the different Us come into play, U3, U6, etc. The unemployment rate everyone talks about is U3 which is the out of work but looking for work number.

        As for the 20% number, it doesn’t really matter if it’s 13 or 20 or 26. Everyone knows it will get high. But everyone also knows it is temporary and doesn’t really mean much long term. Much like how 6M weekly claims is kind of meaningless too. This is all baked in.

        • Steve says:

          ‘But everyone also knows it is temporary…’

          This is a BIG assumption. I would be my annual salary that, just like in 2009, a fairly large number of newly unemployed will stay that way for years.

          Additionally, the number may be meaningless to you but from a psychological perspective 25% vs. 15% is very different and significant. Now whether we actually get that high remains to be seen. To data most models have been so faulty that I wouldn’t put much stock in current predictions.

          What is the labor participation rate pre-pandemic vs. post-pandemic in conjunction with the UE rate will speak volumes.

      • Jon says:

        If the unemployment goes up to 20%, the market is gonna go higher on this news.

    • Social Nationalist says:

      They never bought commercial debt, nor that matters. Suckers rally in a bear market. Then comes the next selloff. Don’t make dumb posts.

      • Ray in LA says:

        The Fed is buying corporate bonds directly from corporations. Hello, that’s debt.

    • Bet says:

      So far this rally is an oversold bounce. The fed is trying to reinflate a popped balloon
      Markets are still nearly at all time highs and the fed keeps launching trillion dollar bazookas at the markets. Buy everything
      No assessment of risk. Price discovery
      Nothing but the most incredible egregious moral hazard ever. It will not end well. With every rally like the last three weeks you can bet your buttinski that wallstreet is off loading into it

      • Jdog says:

        This is correct, why is it people only can see one side of this equation?
        Yes the government is going to borrow a few trillion and disperse it into the economy, but people are not looking at the amount of money that is being destroyed every day. Add up all the money not being made, and all the payments not being made, the devaluation of commodities and oil, all the fixed expenses for businesses not producing, and all the debts which will have to be forgiven or just defaulted on and what the government and the Fed is doing is a tiny fraction of what is being lost.
        Our economy runs on debt, not cash. All this money not being made eventually means allot of debt defaulted on, and that is money destruction. Money destruction is deflation, and deflation makes assets fall in value.

    • A says:

      It turns out everything in America is worth exactly what Jerome Powell decides it’s worth.

      He has the kind of power most Kings could only dream of.

      If he decides stocks should be worth 20% more then he just does it. He has the power of inflation. He can destroy the dollar, eradicate savings, and increase the value of stocks by trillions just by changing a few numbers in a computer.

    • Finster says:

      We can have Dow 30,000 in a New York Fed minute if we don’t mind $15 for a loaf of bread or a roll of toilet paper. The Fed can make the price of stocks go up, but it can’t make them more valuable. All it needs to do is make the dollar worth less.

      And maybe eventually … worthless.

    • Jdog says:


  22. seb says:

    Let’s not forget the Paycheck Protection Program which is loaning small businesses $$ to keep paying their employees. If you spend it all on payroll and mortgage it becomes a grant. Senate is looking to increase this amount again this week. This is keeping alive businesses that would otherwise send workers off to the unemployment rolls. On a webinar yesterday the presenter said “This is essentially federal money to save the state UI programs. Congress will likely continuously extend until the economy is back open.” So the numbers would be even higher in the future if it were not for this program

    • Wolf Richter says:


      PE Firms all over the PPP; they have lots of LLCs, and they’re going to try to get this free money for their LLCs. They’ve got some of the best lawyers on this. It has already become a big stink. So yes, there will be lots of beneficiaries, but maybe not only the ones you have in mind.

      • Lisa_Hooker says:

        A good time to buy up some small failing desperate corps on the cheap and set the lawyers to sucking up this new wave of federal largess. I’m sure it can be made profitable.

  23. DeerInHeadlights says:

    I try to stick to the fundamentals and I don’t see fundamentals of the economic impact changing. The people who are right now not having to pay rent because they can do so for 90 days, do you think they’ll start paying it as soon as the 90 days are over? The people who can’t pay rent are likely the same people who’ve lost jobs in the service sector. The last thing they’d want to do with those $1200 of fed money is to use it all up in rent. They’ll want to hold on to every morsel thrown at them so they can survive and only use it in essentials, like food and water. What happens to landlords who don’t get their rent checks and therefore can’t make mortgage payments for months? Banks who made those mortgage loans?

    Also, after ‘re-opening’ the economy, are people going to flock to restaurants and stores and start spending like crazy again? Heck no. This is going to get uglier and uglier and uglier from here on out. Vaccine or not, this has changed things for the foreseeable future from many perspectives, not the least from the economic perspective.

    Stick to your fundamentals and don’t be swayed by daily news. Remember, the news is rosiest at the top of the market (or the recovery)…

    • J7915 says:

      The Economist had an article, IIRC sometime mid 2019 about the social memory and its reaction to natural disasters. Essentialy we can count on 2 generations, maybe three before this epidemic’s last tremors, echoes are forgotten.
      The author studied real estate and the effect of rare floods, and the resettlement.

      Polio, smallpox, the varius tropical fevers. What flag were/are the cruise ships flying to indicate quarantine conditions? Is the yellow signal flag still used?

      Look at Germany and the hyperinflation…credit cards are now penetrading the economy as objects that are loans, not just cashless conveniences to be paid off ASAP.

      • Lisa_Hooker says:

        @ J7915 – Yes, the yellow flag is still shown on entering a foreign harbour to notify the harbour master. No one is allowed to leave the ship until she has been cleared. Quite often the captain could take papers ashore while crew/passengers remain onboard. Now, with the pandemic, the harbour master may be sending a boat out to the ship.

        • Lisa_Hooker says:

          Should have added – if there is known illness aboard the four quadrant yellow and black quarantine flag is shown instead of solid yellow.

    • Kasadour says:

      The people who are right now not having to pay rent because they can do so for 90 days, do you think they’ll start paying it as soon as the 90 days are over?

      George Thorogood explains it this way:

      She a-hollerin’ about the front rent, she be lucky to get any back rent, She ain’t gonna get none of it. ?

      • Jeff Relf says:

        Kasadour quotes George Thorogood:
        > She a-hollerin’ about the front rent.
        > She be lucky to get any back rent.
        > She ain’t gonna get none of it. ?

        That’s exactly how it works here,
        in New Detroit,
        formerly known as “Seattle”.

        It’s government-sanctioned squatting,
        looting, drugging, fucking, etc.;
        it’s party time, no rules !

        If the city could be bothered to care
        for its mentally ill drug abusers, long-term,
        it’d be safe to raise interest rates,
        and pop this insane asset price bubble.

  24. Kreditanstalt says:

    These claims – and the multiplicity of associated payouts, checks and guarantees – are bailouts of bankrupt entities and individuals.

    Should we be rewarding those whose spending and standards of living have for years exceeded their means?

    Should we be rewarding those who failed to save, chose to live paycheck to paycheck, and who are constantly dependent on credit lines and debt?

    Should we be creating zombies? Propping up saving-less entities and individuals which should go under when their lifeblood cheap credit and cash flow dry up?

    The term and indeed concept of “bankruptcy” is vanishing…

    • Social Nationalist says:

      These claims are about people not working until a vaccine is made is partially true and politically smart. Structurally, there has been almost no stimulus for this. Transfers really don’t count much. You just wouldn’t have bankruptcy, but a whole country of people. The workers never have been able to save. Breadlines and supply lines would begin again and yes, they existed during the good times of the metal currency era. My great grandfather wrote about it in the early 1900’s.

      Makes more charismatic alternative systems look………….more attractive.

    • DeerInHeadlights says:

      Fully with you there. If you fail to plan, you plan to fail. However, having said that, what would you say to a system, a government, an economic elite who have endlessly and relentlessly tooted the horn of a ‘robust’ economy and an economic ‘recovery’ since GFC/2008 that deluded much of the population into a false sense of security and fueled the paycheck-to-paycheck living that you rightly decry?

      Worse, when the min-wage worker looks around him/herself amidst the ‘recovery’ and says wow…the economy is doing so well but I’m still struggling to make ends meet, something really must be wrong with *me* and not the system because everyone else seems to be living it up. That sends all kinds of wrong signals to huge portions of the population. You end up with a population that makes financial and economic decisions that are based neither on any semblance of reality nor on the real health of the economy.

      Now who do you think deserves most of the blame?

      • J7915 says:

        How many residents of NCY offered to pay their landlord 2-3 times more or begged him to gentrify their apartment, indeed entires blocks?

        That real estate was either inherited, or bought on speculation with $$$ in the eyes. And screw the people who sweep the side walk, mop the lobby etc etc. But come a draft, guess who has a friendly Dr?

      • 91B20 1stCav (AUS) says:

        Deer-check. Our supposedly great American economy has been relentlessly hollowed-out by financial gamesters of all stripes since the late ’70’s. The lack of true resilience from an external blow to an economy touted by the current administration as ‘the strongest in history’ should not come as a surprise to anyone watching the arc of our nation over the last forty years.

        As you note, when the current and future funds in the pockets of the proles have been pretty well picked over two generations of officially promoted, accepted and embraced too-easy credit, it’s hard to see the coming result as an optimistic one.

        Thank you, again and always, Wolf, and commenters for relentlessly attempting to shine the light on our situation, and declaring the emperor’s lack of cover.

        Stay well, y’all. May we all find a better day.

        • DeerInHeadlights says:

          Exactly. True resilience is when you can weather a strong external shock. If you can’t, it’s an empty shell of a system but then again that’s what a financialized (FIRE) economy is.

        • Stephen says:

          Good to see someone from the 1st Cav. My father served in the 1st US Cav during WWII, coincidently, ‘liberating’ from the Japanese some of your neighboring Islands such as the Admiralty Islands in the Bismark Archipeligo and parts of New Guinea. My Father has long past on, but had many great stories of the kindness of the Aussie people when they trained there before debarking for combat missions.

        • 91B20 1stCav (AUS) says:

          Stephen-thank you greatly for the kind words, and relating your dad’s Pacific Theater service (my father was Navy @Guam, Saipan, Bougainville and Okinawa). Though I do have a pair of Australian nephews, I must clear up a common misperception of the ‘AUS’ in my handle-from a different war, a different time, it’s the component descriptor abbreviation for ‘Army of the United States’, meaning I was drafted-as opposed to an ‘RA’ meaning a ‘Regular Army’ enlistee. That said, we all served and bled the same.

          Take care of yourself, try to keep looking forward, and may we all find that better day.

      • Jdog says:

        The system is always going to bs you. That is what they do. A 2% growth rate is hardly robust, and is in fact the weakest recovery in decades. See that is the problem, people believe what they are told instead of seeing for themselves. This entire so called recovery was just a fraud perpetrated on inflating asset values and then borrowing against the inflated values. This all works great until people lose confidence in the value of assets at which point it goes to crap in a hurry and does not recover for a long time. This entire economy is based on the greater fool theory, and that is simply not sustainable. At some point in all bubbles, people see assets for what they really are instead of some magical thing that has unlimited potential value.

    • VintageVNvet says:

      Try living and raising a family on $10 per hour, or the current minimum wage, for one year, and let us know how it works out for you.
      Friend of mine made his construction tech students work out a budget to do just that in 1985, to make them understand why they needed skills, including basic math that a lot of them, age 16+ did not have.
      He told me some of them really got it, the others planned to sell drugs.

      • California Bob says:

        You need basic math to be successful selling drugs. TV shows like NatGeo’s ‘Drugs Inc.’ interview (masked) dealers from street thugs to higher-up distributors, and they all have a pretty good grasp of percentages–how much to cut and how–up to the economics of buying a ‘key’ and breaking it down to gram-sized packets (with varying amounts of adulterants). You just have to make math relatable.

        • 91B20 1stCav (AUS) says:

          Ca Bob-sidebar-good comment! Hated maths (my arithmetic and geometry were ok) until I needed to figure out two-stroke exhausts for my racing efforts, suddenly it made a lot more sense. I suspect more emphasis on relatables in mathematics education would lead to a more informed electorate and increased general ability to understand complex systems of all types, but then again, maybe not.

          May we all find a better day.

      • Jdog says:

        Why would someone who only makes $10 hr get married and have kids? There is a thing in life called personal responsibility, and it dictates that you take control of your life and act as if you have some degree of intelligence…

  25. DR DOOM says:

    The Fed has nationalized the American Ecomomy and is now the un-elected 4th branch of government. It can do what-ever it wants to do. If you are in the club it can make you whole if your debt blows up. If you are a saver you will be dealt with severely . I will resist by the only method I have at my disposal. No DEBT .

    • Social Nationalist says:

      lol, nope. Keep believing that. When recession lingers, you will notice some things.

    • OutWest says:

      That’s right. In 2008, my household debt was 4x my house income and I nearly lost it all.

      Lesson learned.

      In 2020, zero debt (sold all risky assets) and am 100% cash. I sleep well and can only hope for the best. I am currently employed fortunately.

  26. Memento mori says:

    Fed buying junk bonds. This is a joke.
    Everything is rated AAA now, shut down those useless ratings agencies.
    Next employment report, Fed will start buying stocks. It’s all fixed.

  27. Social Nationalist says:

    The market is going up on “Hopes” of V recovery amid supposed “improvements” due to social distancing. Completely do not care. The Fed is irrelevant as well. When market sentiment confirms that the recession will linger with after effects, then a 2nd crash will begin. I would love the market up to around 25000 then start feeding again. I have not shorted 10 days.

    This board really needs to educate itself. It lives too dialectically, hoping a perfect capitalist system emerges of their own choosing. A bourgeois disorder no different than fashion shows created by the government to boost selfishness aka consumption.

  28. Pete says:

    Good thing you covered that short when you did Wolf!

    Now that the Fed is buying junk debt, the market could easily hit 3000 again in the next two weeks.

    The question is, would you put that short on again, or do you think the game is now so rigged that it’s pointless to even look for ‘true value’ in anything?

    • Bobby Dents says:

      I doubt it. The Fed really can’t do anything for a non primary crisis. Just admit sentiment controls the moves.

  29. Michael Engel says:

    1) US 10Y = 0.75%.
    2) I got $1200 in my bank and I am happy with Uncle Sam.
    3) 1200 : 0.075 = $160,000 in my account.
    4) Since I don’t saved, Uncle Sam is saving me.
    5) When I cry nobody care.
    6) If millions like me cry, I will get another $1200.
    7) My fake saving account will be worth $360,000.
    8) Those who saved yesterday might lose their 401K tomorrow.
    9) Losing retirement after saving for 30Y is painful.
    10) I an a happy because I never saved.
    11) The rich are getting helicopter money when they cry.
    12) Why I am getting only $1200 and they get a helicopter loaded with dollars.
    13) When their helicopter crash, the rich give hell,. They are like
    6Y kids throwing tantrum in rich people home. The gov buy them a new helicopter to keep them calm.
    14) Nobody care about me and that make me mad. I am going to jump over the barricades.

    • Just Some Random Guy says:

      2) I got $1200 in my bank and I am happy with Uncle Sam.

      You got paid already? I thought the $ wasn’t going out until next week.

  30. Matt says:

    So what happens when we get the all clear for our authoritarian house arrest yo be lifted and the Dow is at 33k and the housing market is still at its peak?

    • Jdog says:

      Then unicorns fly out of your backside, and we all live happily ever after…

      The normalcy bias is strong in this one…….

  31. Max Power says:

    While these are cataclysmic numbers, Mr. Market doesn’t seem overly concerned given that the S&P500 is only down about 15% form its peak.

  32. Dos Tacos Mas says:

    “A hungry mob is a angry mob.” — Bob Marley

  33. tommy runner says:

    stimulus? they cant deliver enough money to buy the batteries. how many groceries will assurances / applications / sba loan numbers purchase? signed two weeks ago, set up friday, and still 12 yrs late .. we’re quite aware its no fault of our own, that’s neither a question or the correct answer, its condescending.
    this cycle began w/ a hand job and ends w/ a joe job. couldn’t find his butt w/ both hands placing 4-5th in the hand count Caucasus’s. effects his escape under cover of darkness, then move to machines and he runs the table.. drooler/fooler, with out wind to fill the sail or destination, rudder is useless.

  34. A says:

    Best week in the stock market since 1974. Because billionaires make sure that when you lose they win.

    • DeerInHeadlights says:

      Sickening, but completely understandable and to some extent, predicable.

    • Just Some Random Guy says:

      I believe it’s best week since 1938. But who’s counting?
      We will probably be at Dow 30K by EOY. All this gyrating and panicking will have been for naught. Wonder if 5 years form now anyone even remembers the great panic of 2020. It will have been so short lived that people will mostly forget about it, I think.

  35. George W says:

    What a Joke…

    6.6 million filed for unemployment, so what?
    What happened to the rest of the hundreds of millions?

    If we had a real economy, hundreds of millions would be filing for unemployment. 6.6 million to support them all…

    Just keep on adding those trillions, whatever it takes to keep this circus in the air.

    • Wolf Richter says:

      George W,

      Wait a minute. Get the numbers right first.

      16.7 million filed for unemployment in three weeks (see the first chart). Many more will file over the next few weeks.

      There were 151.8 million nonfarm jobs (working people) in the US before all this happened. So those unemployment claims over the past three weeks amount to 11% of the number of people who had jobs.

      When the monthly unemployment rate catches up in a couple of months, it will likely be over 20%.

      • DeerInHeadlights says:

        Wow. With the workforce totaling approx.164 million, that’s ~33 million out of work. That’s like all of California out of work and then another third.

        • Lisa_Hooker says:

          @DIH – actually it’s worse than that. End of last year the labor force participation rate was only ~63%, the employment-population ratio ~61%

  36. timbers says:

    The internets say the Fed does not have legal authority to buy junk bonds, and is breaking the law. Can I make a citizens arrest of Jerome Powell?

    • Wolf Richter says:

      If you decide to do this, get a video of it, and I’ll post it here :-]

    • Bobby Dents says:

      They aren’t buying junk bonds. Junk bonds are dead money no matter who has them.

      Economic damage from this is impossible to know until later this year. There is no real reason to even make assumptions.

      • timbers says:

        The internets did not say the Fed has bought junk bonds. The internets are sayung the Fed will buy Junk bonds if it wants to.

      • Mr Wake Up says:

        Damn “Tax free Texas” cut every industry off!

        Spoke with a tech executive today HQ in TFT has satellite offices here in NYC said he is closing all sat offices indefinitely.

        Quarantine proved to be very successful amongst his staff working from home they have been more productive then working in
        In any additional operating expense offices.

        Office apocalypse catching the tailwind of the retail apocalypse!

        Many closures to come, restaurateurs already surrendering spaces ahead of any artificial good news. Construction companies, distributors, manufacturers and list goes on all saying the same thing how will they operate within social distancing guidelines and massive overhead.

        Retails investors are suffering from FOMO showing up to the rigged game wanting a piece of the action. Only action is designed as a refund policy for the .001% of 1%. “Caveat Emptor”

    • Kasadour says:

      American citizens may have a standing to file a class action lawsuit against the FED for unjust enrichment, taxation w/o representation, interest rate arbitrage, and whatever else sticks to the wall. The damages, in the form of greatly diminished purchasing power of the dollar, meet the proximate cause criteria of the FEDs reckless and intentionally negligent monetary policy.

      • timbers says:

        Didn’t the Ivy League educated smartiest folks on the Supreme Court decide we don’t have standing to take such people to court? Such people being the ones the smartiest folks randomly decide.

      • Then you end up suing Congress, unless you seize upon the Feds expansion of Congressional authority. In the wake of Covid 19 the lawsuits are going to pile up, esp health care workers vs their hospitals. State lawsuits vs the Federal government. Lower courts will rule, and SCOTUS will overturn, however under an overload of cases most of those judgments will probably stick.

  37. Michael Engel says:

    1) Investing in stock is risky. Investing in stocks should have a large premium.
    2) My $1200 check in the bank is equivalent to a fake saving account worth $160,000 .
    3) A similar $1200 coming in Dec 2008, when US 10Y was 2%, have a
    fake value of : 1200 : 0.02 = $60,000, when the stock market
    collapsed 60%.
    4) In 2016 10Y = 1.3%. When stocks declined 50%, my 1200 : 0.013
    = 92,300 fake saving account.
    5) Stock market premium is much lower than u think.
    In the long run, risk avert, by the lower end have more premium, make a lot of sense.

  38. Bobby Dents says:

    Only Social Nationalist gets it. Follow sentiment people. When the market declines again I will laugh at you. Sentiment is what drove it down.

  39. Yancey Ward says:

    By the end April, it will be probably 30 million applications, or about 20% of the employed civilian labor force. I expect the unemployment rate for April will be 12% (surveys end mid month), and in May it will likely be in excess of 20%.

  40. Yancey Ward says:

    And these are just the people who actually lost their jobs. It isn’t accounting for the “work at home” people who are still getting paid, but, to perfectly honest, aren’t actually producing anything. I imagine the actual economy will be at 50% production by the end of April, or less.

  41. Yancey Ward says:

    A question for Wolf- are you considering reentering your short positions? You made a great call closing them when you did. I knew a bounce was coming, but the size of this one is still quite stunning given the economic calamity now in full progress.

  42. sierra7 says:

    It’s “early days” friends. If this “lockdown” in the US continues another 60-90 days and/or if the “food chain” becomes contaminated God help us all.
    Our county is already levying rules of fines for (up to $1000) violating the “(survive) in place” mandate. Many rules of movement can be changed/restricted all in the name of “national emergency”.
    After the restrictions: martial law.
    The “markets” haven’t been real markets for years.
    No-one could have planned for this. You can yell and scream and pantomime against our political leaders but this could not have been planned for…..for sure under a “for profit” ideology.
    If I remember history correctly at the very beginning of US mobilization for WW2 there were no “military rations” available except (get this) the leftover WW1 rations which were then salvaged and used.
    In my opinion this is the “Black Swan” event that is pushing the US/global economy into the abyss.
    Like I said above: Just hope this doesn’t contaminate out food chain….from farm to grocery stores.

    • cesqy says:

      Political correctness stifled freedom of speech.
      A viral pandemic restricted freedom of assembly.
      What’s next on the list?

    • noname says:

      Smithfield temporarily shuts pork plant due to coronavirus

      A Smithfield Foods pork processing plant in South Dakota is closing temporarily after more than 80 employees tested positive for the coronavirus

      • Another myth busted; the red states aren’t infected. Wonder how this happened? These workers are not your typical ski resort crowd? However 2% is a small infection rate, 1/3 of 3700 is a lot more than 80. We learn something new all the time. Sort it out after we all go back to to work next month.

        • noname says:

          Like I told another poster recently, there are no “red states” or “blue states”.
          There are something like 80 or 90 languages spoken at this plant, allegedly, supposedly.
          I’ve read there are now 190 cases, allegedly, supposedly. Imagine the working environment. Imagine the number who are carriers now.
          Do you know who owns this company now? Sad!

  43. Baypoor says:

    Well, I am swimming against the current and just got a job offer today. Silicon Valley is still hiring (though I am a lawyer not in IT). My current job may or may not be layoff proof, but I have to say it is a strange time to be changing jobs. I think I’ll do it though. Now if the Bay Area real estate market were to drop enough so that two highly compensated but poor-feeling lawyers could purchase something decent under $2 million…

    • DeerInHeadlights says:

      If you’ve held out for long as I have in the Bay Area, what’s a couple more years? I think asset prices are going to fall as more and more real economic data starts coming out and it won’t be pretty. In any other market, that would result in a glut of inventory but in the Bay Area, we’ve always had a housing supply problem, at least since the GFC. So I don’t know if prices will fall that much here. I can never find my crystal ball when I really need it. :)

    • WES says:

      Bay:. Congratulations! The Easter Bunny came early!

      The Premier of Nova Scotia declared the Easter Bunny and the Tooth Fairy were considered essential workers!

    • Wolf Richter says:

      Awesome. I have a HUGE list of layoffs at startups right here in front of me. HUGE list. Everyone in the book is laying off.

      • cas127 says:


        Could you post/link to the startup layoff list? No elaborate post needed – the raw data itself is valuable.

      • Baypoor says:

        Thanks. Yeah, it is not public yet but doing pretty well. I also know Someone who was just hired by Apple and people getting interviews at established tech companies. But that list is grim

  44. David Hall says:

    Monetary policy Caracas style.

  45. Iamafan says:

    Show me when more debt was a cure to any illness. Now, some think trillions of doses even cures covid-19. This can only end badly. Very badly.

  46. IdahoPotato says:

    The Kudlow-meter is beeping.

    “If I may — it’s cool to work,” Kudlow says to Fox Business. “Working has become cool again.”

  47. Keepcalmeverythingisfine says:

    If I recall, during the run up to this crises, the jobs report showed the category with a large increase in jobs was in services and in that category it was bars and restaurants. It may even have been the largest category increase, I don’t recall exactly. Clearly this is the category taking a huge hit now along with hospitality and travel. Not exactly high paying jobs, and probably not high enough paying to buy a single family home in most areas of the country. Maybe these folks bought cars and were making payments, along with student debt and credit card debt. The jobs report is super bad, and it is very unfortunate, but is it possible that the actual hit to the stock market will not be as bad as it looks from the jobs report?

  48. Keepcalmeverythingisfine says:

    I should say stocks and housing market

  49. timbers says:

    Japan is considering shifting it’s production from China back to Japan, or other nations.

    Japan is smart if it moves production back to Japan.

    America should try to smart like Japan is.

    • Keepcalmeverythingisfine says:

      That’s for sure. Can you imagine how the US economy would take off if we started building smart factories to make things here? It would be tremendous. Seems we’ve had enough of “Globalization” “Service Economy” “Trickle Down” propaganda slogans. Should be obvious to all what we need to do now. Its obvious to Japan.

  50. KPL says:

    “The U.S. shouldn’t bail out billionaires and hedge funds during the coronavirus pandemic, Social Capital CEO Chamath Palihapitiya says. “Who cares? Let them get wiped out.” https://cnb.cx/2Rpmjkh

    The expression on the host’s face when he hears that the rich (and should we say unscrupulous rascals riding on the Fed’s coattails) guys should get wiped out makes this video worth watching.

    This is exactly what needs to be done. But with the Fed and Treasury playing god and so to say becoming law unto themselves, US is a banana republic now. Hopefully the washed out will take to pitchforks soon.

  51. WES says:


    Topics suggestion. I noticed there seems to be a major conflict of interest between the commercial banks and the government’s desire to lend to small-medium size business.

    Commercial banks want to reduce their risks. Lending to small business would increase the bank’s risks.

    When commercial banks are reducing their risks, their role in credit expansion stops and instead contracts the available credit.

    We seem to be seeing the central bankers racing to offset the credit contraction by commerical banks. That might be one reason why the Fed is buying everything in sight these days to try and offset commercial Bank induced credit contraction.

    It is kind of like a Bad race. One side, the Fed trying to increase credit/money (inflating) while the other side, banks try to survive by reducing credit (defating).

    Maybe you could do an article on who you think is winning this credit expansion (inflating)/contraction (deflating) race?

    P.S. I know us little people will pay dearly for this race. We are the losers no matter who wins!

    • Wolf Richter says:

      This economy NEEDS a credit contraction. That’s a normal part of the business cycle. It’ll blow out the cobwebs. There is way too much debt. A credit good contraction solves that problem. Bankruptcy courts will sort through the details. No bailouts needed. This stuff works if you let it work.

      That LAST thing this economy needs is more business debts.

      • KPL says:

        But then, Wolf, it will wipe out the share holders and the Fed being the self-appointed custodian of the stock market has to ensure it only goes up and thus cannot allow it.

        A good mess we have gotten into because of this.

      • Jeff Relf says:

        Wolf Richter says:
        > This economy NEEDS a credit contraction
        > [ not more debt ].

        The world could raise interest rates today,
        popping this ridiculous asset price bubble,
        so long as it’s prepared to give long-term care
        to mentally-ill drug abusers.

        Were this to happen, homelessness and wealth
        inequality would be quite tolerable.

  52. James W Fry says:

    I’m currently on a new high profile automotive factory complex project in the southeast. What won’t be factored into most statistics is the actual loss of production, of all sorts, due to the various regulations now faced. In the last six weeks, very little progress has been made on this particular project which has been interpreted as “essential”. When craft labor doesn’t elect to show up or they are handcuffed related to how they are permitted to work, all forecasts of schedule, production and cost become null and void.

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