Week 7 of the Collapse of the U.S. Labor Market

“Insured unemployment rate” spikes to 15.5%, is already over 20% in some states, 25% in Vermont.

By Wolf Richter for WOLF STREET.

State unemployment offices have processed a gut-wrenching 33.48 million initial claims for unemployment insurance over the seven reporting weeks since mid-March. In the week ended May 2, state unemployment offices have processed 3.169 million unemployment claims, seasonally adjusted, according to the US Department of Labor this morning.

Each weekly number of unemployment claims over the past seven weeks blew away the weekly records of the prior unemployment crises in 1982 and 2009; today’s claims were nearly five times the magnitude of the prior record spikes. So initial unemployment claims are falling, but they’re still at a catastrophic level:

The layoff announcements by larger companies continue on a daily basis. Yesterday, Uber announced that it would lay off 3,700 people; Haliburton announced that it would lay off 1,000 people at its corporate headquarters, after having already laid of thousands of people elsewhere; the Natural History Museum in New York City announced it would lay off 450 people; etc. etc. It’s a loud and terrible drumbeat. Thousands of smaller companies are laying off people without media attention.

In California and many other states, systems are now ready to process unemployment insurance claims by the self-employed and contract workers that have become eligible to file for unemployment insurance under the provisions in the stimulus package. And some of those claims are now being included in the data.

“Insured Unemployed” spike to another horrific record.

Someone who filed an “initial claim” for Unemployment Insurance (UI) and a week later still doesn’t have a job is added to “insured unemployment” – also called “continued claims.” This lags by one week.

The number of people that make up the “insured unemployed” spiked to 22.647 million for the week ending April 25, about 3.5 times the record of the era before The Virus – 6.63 million in May of 2009:

The “insured unemployment rate” for the week ended April 25 spiked to 15.5%. The record in the era before The Virus was 7.0% in May 1975.

At the state level, the data for the insured unemployment rate lags one week. The table below shows the 13 states where the insured unemployment rate for the week ending April 18 was higher than the national average of 15.5%, according to the Labor Department today. New Jersey is on the list because it is within a rounding error of the national average. All other states were below the national average, including California (10.9%), Texas (7.8%), and Florida (6.3%) which has been struggling to catch up processing unemployment claims.

Insured Unemployment Rate by State Week ending Apr 18 Week ending Apr 11
1 Vermont 25.2% 21.8%
2 West Virginia 21.9% 14.4%
3 Michigan 21.7% 21.8%
4 Rhode Island 20.4% 16.8%
5 Nevada 19.9% 16.8%
6 Connecticut 18.7% 18.5%
7 Puerto Rico 17.9% 12.8%
8 Georgia 17.3% 14.0%
9 New York 17.2% 14.4%
10 Washington 17.1% 16.0%
11 Alaska 16.9% 15.6%
12 Louisiana 15.9% 13.0%
13 Pennsylvania 15.7% 18.5%
14 New Jersey 15.4% 13.8%

This “insured unemployment rate” is very different from the household-survey-based unemployment rates in the monthly jobs report, which attempt to show the percentage of people in the labor force who are actively trying to find employment, including gig work. Not all of the people looking for work are receiving unemployment benefits, and so the unemployment rates in the jobs report, when they finally catch up, are higher than the “insured unemployment rate.” We will find out on Friday what that rate looked like for April.

The 25 states with the most initial claims, week ended May 2.

California is back in first place, replacing Florida, which had moved into first place last week as it was finally catching up processing claims. During the initial burst in March, California had reported over 1 million claims in a single week. This has been dropping since then. The state unemployment office (EDD) has started to process applications by previously excluded gig workers, and those claims are starting to be included:

Top 25 States for Initial Claims, week ended May 2
1 California 318,064
2 Texas 247,179
3 Georgia 226,884
4 New York 195,242
5 Florida 173,191
6 Washington 109,167
7 Pennsylvania 96,603
8 New Jersey 87,540
9 North Carolina 84,716
10 Kentucky 80,060
11 Illinois 74,476
12 Michigan 68,952
13 Oklahoma 68,237
14 Maryland 65262
15 Virginia 61,138
16 Ohio 61,046
17 Massachusetts 55,448
18 Louisiana 52,137
19 Missouri 49,402
20 Minnesota 47,134
21 South Carolina 46,747
22 Oregon 45,102
23 Indiana 43,777
24 Arizona 42,909
25 Wisconsin 38,002

Nobody knew what would trigger the next financial crisis, but just about everyone knew it would involve the record pile of corporate debt. And so it happened. Now the Fed fixed it. Read…  Nothing’s Fixed: What’s Behind the Corporate Debt Bailout

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  94 comments for “Week 7 of the Collapse of the U.S. Labor Market

  1. Lisa_Hooker says:

    The States are not even close to adequately accepting, let alone processing the number of folks that wish to claim unemployment insurance.

    • Yep. In addition to the shear numbers, their obfuscated forms /requirements must be causing countless inappropriate denials, corrections and appeals hearings, so there will definitely be cases backlogged for quite a while. The comments on Oregon’s applicant guide video make clear the non-clarity of the process, and people’s frustration.

      • BrianC - PDX says:

        Making it hard to get benefits is a feature!

        That way only the *deserving* that can successfully navigate the system will get any reward!

        Because as the elite know: “Better to deny 100 valid claims than to let one cheater have a dime!”

        /sarc

        I wish I was joking here…

      • Joe Saba says:

        I have brother who is self employed(executive taxi) who’s businesses is decimated for 2-3 years or more(airline travel)
        He filed month ago(took state a while to allow those ‘self employed’ to file)
        waiting —- waiting —- waiting —- still waiting
        filing weekly claims – still $0 received

    • Mr vintage says:

      Agree. I was advised by my employer that based on the company wide paycut we qualify for unemployment benefits + 600 free money. However, we need to file a manual form.🤷‍♂️

    • polecat says:

      Meanwhile, I received in the mail a recent legislative district ‘self-pat-on-thy-backs’ circular .. from my local ‘don’t waste a crisis’ state representitives – basically stating, and I quote : “Bla Bla, bla bla bla, bla bla Bla .. BLA !”

      These people have absolutely NO self-awareness.

  2. Bobber says:

    All this adds up to one thing. There will be another round of money printing to fund the state unemployment benefits, not to mention other state funding needs.

    This is why gold and stocks are rising, and the market is pricing in negative interest rates later in 2020.

    I’ve been saying this for a while. You need some stocks, gold, and RE in your portfolio. Not necessarily a huge amount, but enough to protect against inflation. Having a good share of fixed income is good too, because if the fails and markets drop in a deflationary bust, the fixed income will be worth a lot more.

    • alexaisback says:

      In sane – RE = really
      residential tenants have no jobs don’t pay rent and no judge will remove them
      commercial tenants ( excepting liquor stores ) have no business and its better to keep something in there rather than skinhead skate boarders

      Property tax – probably the Only tax the local governments can count on – will you not pay that ?

      Buy real estate – brilliant.

      • Bobber says:

        If I own a house and live in it, I save what my rent would have been. Guaranteed. Get it?

        It’s better than fixed income in many ways. A $600k that saves me $2k/mo in rent returns 4% per year, before considering any change in home value. As long as the Fed is inflating assets, the home will likely rise in value, although it could fall, especially in the short term. Chances if long-term decline are very low, with inflation running hot.

        • Raging Texan says:

          @Bobber

          FYI you can try to outsmart inflation by owning some things you think are inflation resistant, but you will probably be wrong when you least expect it.

          Owning a home seems great. How about my 72 year old friend who is disabled and his house is falling apart? Inflation over decades has pushed the cost of hired labor and materials far above his retirement income. The house he bought decades ago as an inflation hedge is now a source of misery.

          You suggested gold, stocks & fixed income. Might work. But also might not. Market prices might crash 75% when you need them most. Also few people can actually operate that kind of portfolio.

          So what’s an solution that would really work for everyone?

      • Paulo says:

        I have a tenant who is retired and rent is no problem. My son has a tenant couple who are both retired with good pensions and investments. Rent is no problem. We will be buying another rental when it comes available, but will only rent it to someone we know, or will just let it stand empty until we do find a suitable tenant. We charge less than the going rate in order to pick and choose who we rent to, and are able to do so because the purchase was not done with borrowed money.

        RE has always been a good investment for us and is why we were able to retire when we did. Of course I do all the building and fixing.

        • Stuart says:

          You are a parasite.

        • Javert Chip says:

          Stuart

          Yea, I’m hoping that was sarcastic.

        • Ehawk says:

          Yeah speaking like a true boomer. You got to buy houses and save for retirement 25-30 years ago when things were normal.

          That’s not an option for early Gen-Xers or Millennials this time.

          the last 2 decades are crazy for younger people to get ahead. good for you. just to rub it.

        • Ed Kennedy says:

          Stuart & Ehawk,
          With the exception of “status” big cities, a modest home in a good neighborhood is still affordable for the younger generations. Some younger relatives just bought their first house in northeast Ohio with the mortgage approved on a single working class income. They did it by living very cheaply for a number of years to save enough for the down payment.
          I got started the same way decades ago, and I assume that Paulo’s background is similar.
          The “status” big cities were also not affordable 40 years ago for working people; nothing has changed there.
          Next, don’t underestimate the value of owner sweat equity. Pretty much every house I have owned was priced below market and needed some work, which I did myself. The value of that work was returned to me (tax free) when I sold the house.
          Finally, don’t think the economy was “normal” for us older people. I have been through Stagflation, the oil crisis, the 1980’s crash, the dotcom crash, the Real estate crash, and now Coronavirus. Every time, the Media headlines said it was ” The end of the world”. It wasn’t then, and it isn’t now.
          Be sure to save some during the good times to carry you through the bad. Money in a bank account isn’t as sexy as a new sports car, but it is a lot more useful when times get tough.

        • Wisdom Seeker says:

          @Stuart and Ehawk –

          There actually are some landlords who aren’t parasites. Even among the younger generations.

          But you have to have good credit to get into that game, a willingness to fix and repair your tenants’ damage, and the ability to actually save your revenues for many years in order to roll them into additional properties. You also have to have people skills to identify and retain really good tenants.

          It’s not parasitic because a lot of people would prefer to pay rent rather than suffer the burdens of ownership in a mobile world. Many people can’t stay in one place long enough (~7 years) to recover sales expenses etc.

          Some people legitimately need to rent and therefore the economy legitimately needs small businesspeople to be landlords.

          What’s parasitic are giant corporations borrowing trillions at suppressed interest rates in order to buy up monopoly positions in local markets, jack up rental costs, and line their pockets at everyone else’s expense – then collect taxpayer-funded bailouts whenever it blows up in their face.

        • Raging Texan says:

          @Ed Kennedy

          You said: “With the exception of “status” big cities, a modest home in a good neighborhood is still affordable for the younger generations” , and gave an anecdotal example for one family.

          First let me define affordable home: 1 to 1.5X annual salary. With low and stable property taxes, preferably zero property taxes but I can’t find that anywhere.

          I am one of the “younger generations”. A few people in my generation, like the example you have cited, have been able to get a job in an area that allows them to buy an affordable house.

          But my experience is typical among my circle of “younger generations” friends. Most of the jobs we can get are NOT anywhere near affordable housing markets.

          Speaking for myself and my wife, owning a home is no longer an enchanting prospect. We may never own a home. We aspire now to buy a camper and alternate between our camper and going on cruises (when they reopen), living forever free of the massive expense and responsibility of home ownership- Unless prices drop significantly, such as 1X salary.

  3. Petunia says:

    NYT Headline: Neiman Marcus, a Symbol of Luxury, Files for Bankruptcy.

    Sometimes you can only see something ending in retrospect. But this time it’s really different, you know it’s the end of an era. We will all look back and know this is when things really changed.

    • Joe says:

      Canadian politicians are just firing off all kinds of penalties. One mayor will charge $5,000 a day if you travel to your cottage. To make laws and penalties on the fly is unbelievable.

      • Petunia says:

        One Australian man decided to camp out on a mountaintop alone during this crisis. The authorities unnecessarily used a police helicopter to bring him down. He was alone and fine, but his safety was never the point. There is an amazing amount of repression going on now in the entire English speaking world. It’s an experiment of sorts, bound to land up badly for all.

        • MC01 says:

          But the English-speaking world still hasn’t lost its sense of humour:

          “Good evening. This is the Black Country Police, how can I assist you?”
          “Hello? Police? Two men are trying to break into my shed! Please, send help!”
          “I am sorry sir but there are no resources available right now. There’s nothing we can do”
          “… oh my God! They are not wearing facemasks and one is patting the other on the back after breaking the lock!”
          “Sir, don’t worry, help is on the way! I am redirecting the nearest patrol: it should be there in three minutes”

        • MCH says:

          @MC01

          No kidding, the current suspension of common sense is incredible.

          For example: Low level criminals in CA are given a citation and sent on their way. There was a story in LA about a guy who was picked up by the police 3 times in 12 hours, robbing a house, stealing car, etc, and he got three citations.

          While things like no masks are getting enforced, selectively I think, and some times with common sense. But if we really do that, why do we even need the police for?

          Then there is a crazy story of the saloon owner in Dallas who gets tossed in jail because she opened her business (yes, against the state order), but by the way, if you are stealing things, as long as it’s under $750, you won’t get prosecuted. (finally, TX is catching up to CA) We’ve had that set of law for years, not prosecuting low level criminals, because it’s socially unjust.

          If that’s really the case, why bother having these laws at all. May be next, we can remove bank robbery as a criminal offense, after all, in my opinion, the banks have robbed the citizens of the world aplenty, so, why not even the scales.

        • Young Buck says:

          A guy rear-ended my car in a rental truck, it was pretty slow and the only damage was a cracked bumper cover. I was pissed. The guy wouldnt pull over but a cop saw it. Turns out he had open warrants in another state. Cop said they weren’t extraditing and didn’t even give him any kind of ticket. He also gave me fake insurance info. Boned again

    • Suzie Alcatrez says:

      Two leveraged buyouts left Neiman Marcus in a precarious position before the pandemic.

      Third times the charm?

      • 728huey says:

        I was just going to mention that, but you beat me to it. It wasn’t COVID 19 that caused the bankruptcy; it just accelerated it.

    • Xabier says:

      How true Petunia: people have been belly-aching since 2008, but they will probably come feel that the years before COVID were a kind of Golden Age in comparison with what awaits them.

  4. KPL says:

    “a gut-wrenching”

    For us. But Powell will be a happy man. He can use this to print more money and send the stock market to the moon.

    • Cas127 says:

      KPL,

      Not all stocks are doing well…

      YTD returns

      QQQ – up 3% (hugely dominated by mega tech cos)

      Russell 2000 – down 24% (thousands of smaller tech/financial/misc cos)

      SP 500 – down 11% (bulk of large US cos, including mega techs)

      The mkts are being held up by a tiny number of often very overvalued megatech companies and a bunch of flat health care/drug companies.

      Plenty of companies (see Russell 2000) are getting nailed in line with employment losses (and full hit Q2 numbers won’t start coming out until last week in July).

    • patrick helmick says:

      when unemployment reaches 100 % it will be time for a stock market sell off of between 5-10 % – then even more highs to come ! MMT means print as much $ as you want – I say 250K guaranteed income per person in the world – that will solve all out economic and social inequity issues – I see it coming to a FED near you !

  5. I understand that in states like MO 3/4s of the workforce is government. Can these various state local governments lay off people? Once they make you a contractor, anything goes? Even in states which have strong public unions like CA, they have been pushing those with seniority out the door for a long while. CaPers even had a trial balloon on unwinding districts which choose to opt out. The legal case allowed them to claw back some stock market gains, now what? If a district opts out they don’t have to take the losses?

    • Petunia says:

      In Florida, the really good jobs are all govt jobs. I have seen some layoffs but they are usually generous buyouts for older workers. I heard, a couple of years ago, that all the tech jobs in Tallahassee were being done by H1Bs from India, all the Americans were outsourced.

      Another point I would like to make is that interest rates are not only set by the market or the fed. States like Florida set interest rates when they guarantee returns on pension funds. While I lived in Palm Beach County, they guaranteed an 8% return to the local police union, without basing it on any market realities. The 30 year mortgage rate at the time was 5-6%. A discussion on having the pension pegged to market rates was never on the table.

      • Cas127 says:

        “the really good jobs are all govt jobs”

        Good for who…

        • Petunia says:

          In Florida, govt jobs form the core of the middle class. The rest of the workers are low wage or affluent.

        • Cas127 says:

          P,

          “govt jobs form the core of the middle class.”

          Nationally, about 20% of all employed work for government – that % doesn’t vary radically across individual states.

          I don’t think the middle class can really be defined as being smaller than 60% of the country (and 70%+ might be more accurate).

        • Trinacria says:

          Most of my Italian relatives, friends as well as their children all aspire to have government make work jobs. How can a nation stay afloat when so many folks want to be in the proverbial wagon? Fewer and fewer end up pulling the wagon. It is happening in the USA too, but Italy is further ahead. Things are going to get really weird in the so called industrialized world. These countries, including us, have been in the process of being looted and hallowed out for decades !!!

  6. Jdog says:

    Money is not wealth, labor is. When people are not working, wealth is not being created.
    We will not see the effects of this wealth loss for a few months, but when we do it will be huge.
    Like a whole herd of deer staring into the headlights of a speeding truck.

    • Petunia says:

      When George Gilder wrote “Wealth and Poverty,” the one critical point the book made well, is that in America, the unit of wealth creation was the American family.

      If you want to know why working people and families are under attack, it’s because the corporate state decided to loot the American family. Gilder’s book seems to have awaken the raiders by pointing out were the real wealth resided, in jobs, homes, pensions, and savings.

      • backwardsevolution says:

        Keeping people right on the edge with little disposable income, making it difficult for them to accumulate any savings = no power.

        Offshoring of good jobs, the disappearance of unions, large amounts of immigration to curtail wage increases = no power.

        Under-reporting real inflation and artificially suppressing interest rates, thereby starving pension funds and savers = no power.

        Keeping people divided by political correctness, diversity = no power.

        I could go on and on about the benefits the wealthy have received, but you already know that score.

        This is not an accident; it is by design.

    • sunny129 says:

      Without a growth in the productive segment of the Economy on an organic basis, just continued and insane (with insane credit creation) ‘financialization’ of the Economy along with Trillions worth buy-back has made the Mkts keep going towards the Moon.

      No living wage jobs produced but all that capital+loans borrowed on ZRP+ tax cuts they got ALL went into buy-back! Schuffle more papers ( Wall ST Investment Banks!) Just create more CLOs, CDSs and CDOs++ Look who is getting rich!

      WORK!? What’s that?

  7. Endeavor says:

    In my small town, restaurants and even fast food chains that started out with a carry out option are now closed as carry out not paying the bills. I think car dealers will spike with a host of of pent up lease turn ins and re leasing as more than half of new cars are leased in the state. Then it will tail off once they catch up in my opinion as many families will hold off needing only one vehicle. 3 of 5 golf courses still closed and may not open, I fear. Look for a burst of call backs then a new normal at an undetermined lower level.

  8. BrianC - PDX says:

    I run a small SW contracting firm in the Pacific NW.

    So far none of our clients, that I am aware of, have done layoffs. Instead they are scheduling mandatory unpaid furlough for all employees of various lengths. The most recent is requiring all employees to take two weeks unpaid in the next eight. If you have time off you can use that, but otherwise it’s going to be no work, no pay.

    The other interesting thing is that everyone is prioritizing getting what is currently in the pipeline finished and ready to ship. (These are in progress projects close to completion.) All future work is on hold, and none of the people I talk with will likely have ongoing engineering projects running in Q4. It appears the goal is to start winding down engineering in Q2 and Q3 as projects complete.

    So these people aren’t in the unemployment column yet, but will be later in the year…

    Interesting times.

  9. Stephen says:

    Looks like we (my state) made it to the top 5. I think we were #2 before. I think is is beyond ridiculous that some people see some sort of victory in the number of claims being reduced to approx 3.1M. Say what?? I just shake my head when I see this and say, ‘this did not need to happen.’ You don’t need a Ph.d in epidemiology or a Ph.d in economics to know your economy will just absolutely implode if you lockdown people and shutter businesses. Certainly, those of us following Wolf’s work knew that we could experience a downdraft this year based on many other metrics in play before the start of 2020, but nothing like 30 million unemployed (and this is probably a number that is on the low side).

    Well, I don’t know where we go from here. The FL governor seems to think that we still need a few more weeks of massive unemployment growth here in FL. Yes, he has opened some beaches, but that is hardly going to spare the economy here. We are going to take severe licks here in FL either way, but they could at least mitigate the carnage by just opening the state up without restrictions.

    • Ehawk says:

      You can add a few million for the **undocumented workers** that CANT file for unemployment, which most work in Hospitality, Restaurants, Landscaping, Construction, and other service industries.

      I guess these undocumented can’t get unemployment or federal $600/wk – or the $1200 one time. All of this will ripple through the economy no down especially in CA, NY, WA, TX as the biggest economies.

  10. 2banana says:

    The solution is to open up in the economy in all 50 states.

    Now.

    Despite trillions being printed:

    – Bankrupt companies don’t come back for years, if ever
    – Those jobs don’t come back for years, if ever
    – You can’t print farms, manufacturing, food processing plants, spare parts, etc.
    – The tax loss is going to devastate local, city and state budgets. This, in turn, will lead to mass layoffs of the police, EMT and fire department. How many will die from this?
    – Cancer screening are not being done. Colonoscopies are not being done. Mammograms are not being done. Etc. This is going to lead to more deaths than the COVID from preventable diseases that weren’t prevented.

    We are all going to get this virus, just like we are going to get the flu/common cold. That used to be the whole point of the “stay at home orders” – to flatten the curve so hospitals could handle the volume in a more steady state rate. The volume under the curve didn’t change.

    Now, for some states, the goal post were moved miles back. Now it is “until a vaccine” or “efficient treatment” has been developed.

    Sheer insanity.

    • Tim says:

      It’s odd, really.

      It’s like we are all living through the economic equivalent of the bush fires in Australia, without yet knowing to what extent we have been burnt.

      • Bill from Australia says:

        The difference is the Australian bush recovers within weeks this will have consequences for people for years, have we been manipulated on a grand scale ?

    • Ed C says:

      Some stand tall atop the moral high ground and declare “lives not money”, prepared to stay shut down until the virus is defeated. A lot of companies are afraid that if they force their workers to come back they’ll be sued when some become ill and die. Damned lawyers. They are definitely a factor in reluctance to get back to work.

    • neplusultra says:

      Yeah, the problem is most of the other developed countries have actually gotten this virus under control with a lockdown strategy. So, now we’re comparing our failed state against countries that actually formed a cohesive response that worked. What a fucking country the boomers turned the United States into. It’s actually extremely embarassing. The only thing we can get right is plutocratic looting and defense spending

  11. Joe says:

    Wolf,

    We have a huge shortage of workers in many areas but you must be qualified for these jobs. Can’t train anyone off the streets. They must have government approved qualifications.
    They had to use military soldiers in healthcare to change adult diapers and they were never qualified, had to be trained.
    There will be 24 care homes where the military will now take over.
    Does that make sense?

  12. timbers says:

    OH…LOOK…

    The stock market is roaring. What a surprise.

    • Shiloh1 says:

      Song ditty from ~ 90 years ago:

      “Let’s have another cup of coffee and let’s have another piece of pie!”

    • polecat says:

      I can olny hope that that debt-fueled ass-et rocket explodes to kingdom come !

  13. Brant Lee says:

    How many people and families have to be in their own depression before it becomes official that the world is in depression???
    I sent a few bucks to a friend in the Philippines to buy rice to give out. People are beginning to starve because they aren’t allowed to leave their shanties to grub out a daily living. DON’T FORGET THE POOR.

    • Tim says:

      No, let’s not.

      If I may echo that, and add this;

      Dignity is just as precious as gold. Let’s maintain it every day. Not because you or I need it from others, but because there is to it more than any of us can say.

    • motorcycle guy says:

      Brant Lee,

      On behalf of those Filipinos, I sincerely thank you.

  14. Cas127 says:

    Wolf,

    Thought you might want to opine on the huge CES vs CPS job loss figures for March 2020.

    https://www.deptofnumbers.com/employment/states/

    I know they are compiled differently and the CPS sweeps in more self employed (although less accurate in other ways) but I have never seen such huge differentials.

    • Wolf Richter says:

      Cas127,

      This is totally outdated — from surveys sent to households that were collected in mid-March, mostly pre-Covid-19. They reflect ancient history. Tomorrow we’ll get the April data (household surveys collected in mid-April). They will have captured some but not all of the newly laid off people.

      • Cas127 says:

        Wolf,

        Actually I was focused on the huge CES vs CPS differentials (which I assume will persist, but maybe not) rather than the absolute numbers and timing issues. April data (good to know it is coming out so soon) will of course be more informative overall.

        I do think there is some interesting story behind why the CES and CPS numbers are so variant, even for March..

  15. timbers says:

    The Timbers Federal Reserve Transparency Act of 2020:

    “Henceforth effective today and forward, all QE, SPV, and bailout monies including those from Congress, shall be personally dispensed in the form of USD $1,000 paper currency notes by the Chairman of the Federal Reserve thusly:”

    “By strolling the halls of Wall Street and other stock and bond and financial instrument exchanges, located at any approved location as designated by The Chairman of the Federal Reserve Bank, The Chairman shall toss into the air USD $1,000 currencies notes into the air, equal to the amount of intended expansion of combined QE, SPV, can Congressional approved bailouts.”

    “The Chairman may dress as Santa Clause or costume of his choosing but is not required too, pending the professional dignity of the Office.”

    If the unemployed happen to be there with The Chairman, it’s fair game.

    • Anthony A. says:

      At a $1000/throw, he will be there for months and have tired arms. Maybe have him toss $Billion dollar notes in the air (more effective).

      • Joe says:

        What’s wrong?
        Did you miss out on the billion dollar Trump dollars?
        I have a couple gold plated and put into a frame.
        These do really exist but not for currency use.

  16. Old Engineer says:

    Oh, the unemployment rate will be back to normal by October at the latest. The economy is opening up, the virus cases are disappearing, and all that money was handed out to corporations so everyone will be spending like drunken sailors and unemployment will plummet.

    And if that fairy tale ending doesn’t happen BLS will just redefine unemployment to exclude “acts of god” or some such language, and “voila”, great unemployment rate in time for the election.

    • Concerned American says:

      If you truly believe that I have a bridge I can sell you. Virus cases are still on the rise and will continue to rise now that the economy is starting to reopen.

    • MCH says:

      I think this is optimistic. The things that are being broken now is not going to be fixed by then. The biggest question is will demand come back, I don’t think that is going to happen. Look at airlines, if they are back to 50% of pre C19 capacity, I’ll be amazed.

      Underlying that, there are systematic problems that hasn’t gone away over the years. Income inequality being the biggest, no amount of government bail out of the companies will solve this problem. Only radical solutions will change this, my guess is that some form of universal basic income will become a reality within this decade at the rate things are going now. Don’t ask how its going to be funded, because that isn’t going to make sense, there is going to be a huge shift, in the way the economy works, but the major problem is that demand isn’t going to just come back unless people are feeling secure. And people with their gig jobs, and service jobs, and five jobs to support a living, they aren’t going to support that demand, and neither will the wealthy with their focus on luxury goods.

      The fundamental problem is the destruction of manufacturing and the years of the idiotic narrative that manufacturing jobs are just not value added, and service jobs are where its at. I’m sure that the ordinary guy would rather work at McDonalds or an Amazon warehouse as opposed to a GM factory. But the latter are going to be extinct. (yes, I know all about automation and such, and let me comment that having been in factory that progressively built up their automation, they ended up needing more people at the end of the day due to productivity changes, but that doesn’t happen if the factory just disappear, and by the way, you can’t bring that factory back after and staff it with robots, cause who is going to tell the robots what to do, what procedure to follow, etc, etc, no one, why? because all the people who knew has long since left the job)

      To make it all worse, there is this turtle mentality of let’s focus on saving lives, and following the science. Let me comment on this, scientists may want to consider themselves freethinkers, but most are not, most are conservative by nature, (engineers are that way too, at least all of the ones I know) so, everyone is going to err on the side of caution. And in turn, it will make recovery difficult. Basically we are mortgaging the future for the present. And when the bill finally comes due, I think we’ll find the ROI to be pretty bad.

      • paul easton says:

        All this might be true, but if you take a slightly longer view, a smashed economy provides a possibility of avoiding the major climate change disaster which previously appeared inevitable. When you compare the presence of a biosphere capable of supporting higher forms of life to the alternative, the ROI has to look good.

        • MCH says:

          Well, let’s face it, the problem with the climate isn’t the economy, it is the number of people in the biosphere.

          Just take a look at the population chart of humanity over the last three hundred years, it’s like looking at the US debt exploding over the last twenty years. And that curve is getting steeper, faster.

          Seriously in 1980, the population of the world was like 4 billion or so, we managed to almost double that in 40 years. And people wonder why the environment is changing? Add in a few hundred million new people who want to fly each year plus tens of millions of new cars being put around the world, and all the meat eaters.

          Smashing the economy is just putting a delay on the problem. If you want to improve the climate, well, then time to consider flattening the curve. And I’m not talking about the C19 curve.

      • Petunia says:

        I’m still waiting for the paperless office to take hold. This was the mantra during the years of my education in tech.

        • Wolf Richter says:

          Petunia,

          My office has been totally paperless for years, and I love it. I have a shredder, and that’s where all paper that I still somehow get in the mail (very little) ends up after I scan what I need to keep. I have no more paper files. There is no paper on my desk. All data is in electronic form and is backed up, and the backup is physically stored offsite in case the house burns down. It makes my life a lot easier.

          It’s a breeze to find stuff from years ago… with the click of a mouse, I got it. I cannot imaging ever having had paper files.

      • Engin-ear says:

        IMHO, the positive way to see the situation is that the slow and painful unfolding of your structural problems was accelerated by Covid19.

        So we kind of jumped into 2030. 2020 or 2030, I was expecting such things to happen in my lifetime anyway.

  17. WES says:

    After shutting down the economy in a hurry, the same governments are now in a hurry to reopen the economy!

    The question has to be reopen to what? Deflation? Inflation?

    Some on Wall Street, mention inflation because the Fed is printing money.

    High, 1 in 4, unemployment says deflation on Main Street.

    On Wall Street, are markets up because business input costs are falling? Or because of Fed money printing?

    Can banks find enough credit worthy borrowers to lend to, to increase the level of credit! If they can, then inflation is possible. If not, then deflation is possible.

    Right now gold miners are doing well.

    They can only do well in periods of deflation where their operating costs are falling relative to the price of their product, gold.

    In periods of inflation, gold miners perform poorly because their operating costs tend to increase relative to the price of their product, gold.

    Right now, gold miners are signalling we are in a period of deflation, not inflation.

    • BuySome says:

      Ah yes, here it comes…one free ounce of gold in the glovebox of every near new car you purchase this week. Keep mining boys…we have yet to finish trashing this worthless space rock!

  18. Harvey Mushman says:

    This topic has got me a little depressed today.

  19. Educated but Poor Millennial says:

    Wolf,
    I saw some articles about stagflation,
    With all this unemployment and with consumer prices (except gas prices) going up, I should believe that this the case.
    Or, it is all bogus advertised by our honest Mass Media, so one day we will wake up and see real deflation soon, any idea?

  20. Michael Engel says:

    Is PA getting better ?

  21. Tim says:

    We can all beetle around the figures coming out of America, China, Europe.

    But doing so will not do us any essential good.

    Massive amount of damage is happening in bond markets,check.

    Massive, massive psychological damage is being wrought in every household with furloughed breadwinners, like a slowly whirling knotted cat that strikes at any moment, check.

    Massive.. amounts … of…. ideological… damage… is … also.. being…hammered… into…. those… who… thought….they… had… a …. stake… in…. what… they… thought… was…. their… society…

    And only a F***K**G idiot would disregard the potential consequences of that.

    Sorry, but there it is.

    • Tony says:

      Tim, That’s now a given, in spite of the happy face headlines in your local
      M$M rag and and tube.

      Question: WHEN will those who have suffered ideological damage stop denying reality and face the ugly economic death staring them, and their children, in the face?

      WHAT will they do about it? Civil disobedience in the tradition of Thoreau is nice, but probably ignoring all local, state and federal laws is going to be the norm. Will people bother to file income taxes if they have little, and are getting less from government?

      It is easier to do nothing than something. All bills may become ignored. What can credit card companies do if say, 20% of people just ignore bills, especially after they have been run up to the credit limit to buy essential supplies and food before the cards are cancelled?

      My prediction, people like building or health inspectors, process servers, truant officers, child protective services etc, are going to have to be issued bullet proof vests and sidearms if those job categories even exist in a few years.

      Start a small, manageable, food garden. It’s very therapeutic and is good exercise and liberates one from the outside world.

      • Portia says:

        I am hoping that what comes of this is more worker cooperative businesses. The ones where I live are doing fine, and they have a history of not being as affected as regular, privately owned businesses. Of course it helps to be an “essential business.”

    • Kevin Carhart says:

      A slowly whirling knotted cat! Adversity is making you an excellent writer.

    • paul easton says:

      If they thought they had a stake they were deluded. Their society was ready to self-destruct and take them with it. Ignoring impending climate change = INSANITY.

  22. David Hall says:

    According to my neighborhood Facebook page a local deli franchisee filed for bankruptcy. We had a short tourist season. The snowbirds went north early.

    There are theories about more people being asymptomatic than was detected before. They have antibody tests. Sweden has noticed a rise in infections and deaths, but they do not see a need to shutdown. People there may know to exercise caution.

  23. DeerInHeadlights says:

    Aaaaand the DJIA went up 200+ points today. I’m simply amazed at the number of people that I talk to who have no worry about leaving their entire portfolio untouched in these times. Portfolios mostly comprising of positions they took in the last 2 years…because their fund manager or buddy who they get investment advice from told them one or more of the following:

    1. ALWAYS invest for the long haul
    2. The stock market ALWAYS goes up, *pulls out binder and shows them the historical DJIA trend*
    3. Never pull out of the market, EVER. That’s call ‘timing the market’ and that’s ALWAYS bad. Even if you’re staring at the greatest economic crisis in a century. See (2)
    4. Be greedy when others are fearful (The Gospel of Buffet, verse 3). *ignores the fact that Berkshire just dumped their entire airlines stake AFTER following their own advice per verse 3*

    • Cas127 says:

      Well, it really does depend on how long you can hold your portfolio positions without having to liquidate.

      Even with C19 you might be okay if you don’t have to liquidate for 5 to 7 years…but that is also why the equity % of portfolio should go down with age…the older you get, the more likely you can’t wait years and years to recoup.

      One other thing to keep in mind…most portfolios have positions accumulated over yrs and yrs, at prices much lower than pre C19 peaks…those older positions are likely not under water today.

      It is only buyers at the peak who may have to wait 5 to 7 yrs to recoup.

  24. FinePrintGuy says:

    You are only seeing the first wave of blue collar workers here. A friend recently laid off from his ‘startup’ cant file until the severance package of a couple weeks pay runs out. I’ll bet a lot of white collar jobs are giving a few weeks severance to keep them from writing books. That’s a second wave due to crest in a few weeks.

  25. BuySome says:

    It might be well to remember that long before 1929 came there were fundamental problems underlying the economies of the world. Even as the jazz age played out like an endless party for many, small banks had closed as people moved funds to large urban banks that promised great rewards from concentrated assets which they invested in all the up and coming technologies. When things began to fall apart in 1928 and into the collapse of ’29, it didn’t yet look so bad. The bottom took until 1933, but the real recovery did not happen until a war came. But many might say it took until the end of the war with massive debts, and others may argue it still lasted right through to the days of the Marshall Plan. People have always told me we could never again experience this with having the Fed and all. A lot of them are dead now as well as those who said it’s coming anyways. To blame each other for the hidden actions of a few traitors who used everyone is not helpful. And no generations have ever had anything easy. It’s more a question of what we are willing to do to permanently fix the mess as they lose control over it. Does anyone want to live an Orwellian existense?

    • Xabier says:

      How true.

      We are actually travelling along the classic trajectory, established by archaeologists and ecologists in great detail, of civilizational collapse.

      That we are a hi-tech, globalised, largely urbanised civilization makes us no exception to this cycle.

      A pretty nasty, authoritarian, half-starved, existence is usually the lot of those living in the dying urban centres: those days are approaching quite fast now.

      Hunger and despair have already come for many even now, and will not be going away. So has intensive monitoring of the populace.

      Base your decisions -such as are left to you by governments – on that stark fact.

  26. sierra7 says:

    There’s a reason Warren B. kept the his original home to live in…..he knew what was coming! LOL!
    (The third Q numbers will begin to tell the story of our future adjustments to be made…….take a good look around your abode and decide what you are willing to give up and what you are willing to see destroyed by circumstances beyond most of all our control!)

  27. Portia says:

    Does the Vermont 25% number include the self-employed who can now file for unemployment? I did file as self-employed, and it went into the same system. I don’t know how many other states set up that acceptance of self-employed claims.

  28. The Great Pause says:

    Nobody here is talking about the fact that all these people on u employment (and California is doing a great job processing claims now) are receiving an extra $600 per week for 4 month if needed. Plus $1200 stimulus. Many are coming out ahead. And most will have their jobs back when we reopen things. There is a huge pent up demand for travel and leisure from being cooped up. Homeowners on forbearance and unemployment should be doing OK. Many people got forbearance on car loans. I’m still calling this The Great Pause. It will take a long time to fully ramp back up, but these unemployment numbers aren’t all lost jobs. They are mostly paused jobs. It could be worse to reopen quickly before virus mostly subdued, because people will stay home scared or not want to work. If we just wait it out another month and really tamp it down it will be much easier to contact trace and stop a second wave. At that point everyone will really have confidence to ‘get back to normal. ‘ I sure as hell am not going to sit at a restaurant in Los Angeles when they are still having 800 new cases a day, no matter how far apart the tables are spaced.” But if they get that number down close to zero- fifty a day, people will feel safe and get back out there.

  29. Lisa_Hooker says:

    With the wide current collection of various imperfect “tests” I pay slight attention to the much publicized “new case” counts. I watch the count of the dead. It’s a bit more absolute.

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