Week 8 of the Collapse of the U.S. Labor Market: Nearing a Previously Unthinkably Deep Bottom?

“Insured unemployment rate” in California spiked to 27.7%, “continued claims” hit 4.8 million. In terms of “initial claims,” Georgia & Florida move into 1st and 2nd, ahead of California.

By Wolf Richter for WOLF STREET.

State unemployment offices have processed 2.98 million “initial claims” for unemployment  insurance in the week ended May 9, according to the US Department of Labor this morning. This brings the total number of initial claims processed over the past 8 reporting weeks since mid-March to a gut-wrenching 36.84 million (seasonally adjusted). Today’s claims were over four times the magnitude of the prior spikes in the unemployment crises in 1982 and 2009.

While the weekly explosion of initial claims has slowed from prior weeks, the number of people still filing for unemployment insurance in the week ended May 9 was still at a catastrophic level:

“Insured Unemployed”

People who filed an “initial claim” for UI and who still don’t have a job a week later are added to “insured unemployment.” These “continued claims” lag the “initial claims.”

This number of “insured unemployed” rose by 456,000 to 22.83 million for the week ending April 25. The sad record of the pre-Covid-19 era was 6.63 million in May of 2009. This chart shows the spike in historic context:

However, the increase of 456,000 in “continued claims” over the reporting week compared to the prior week – as bad as it was – was just a small fraction of the prior week-to-week increases that had ranged from 1.3 million to 4.5 million. This chart shows how at least in this reporting week, the surge in continued claims has slowed:

While nearly 3 million new people filed for unemployment insurance in the week, the total number of people considered “insured unemployed” has “only” grown by 456,000 – meaning that about 2.5 million of the 33 million that had filed previously were either back at their old jobs or have found new jobs – such as people that Amazon, Walmart and others hired to deal with the onslaught of online orders.

If this trend is confirmed over the next few weeks, it would indicate that the current unemployment crisis is getting worse at a much slower rate than before. And when it stops getting worse, it would indicate that some of sort previously unthinkably deep bottom has been found.

The 26 states with the most “initial claims,” week ended May 9.

In first place is now Georgia, whose initial claims continue to surge. Florida is in second place. Its initial claims also continue to surge. The unemployment offices in both states are trying to catch up with processing claims.

California, which used to dominate this list with weekly claims of around 1,000,000, fell into third place, with initial claims now down to 214,028. The California unemployment office has largely caught up with the backlog and is now processing initial claims by gig workers, the self-employed, and contract workers.

Top 26 States, Initial Claims in the week ended May 9
1 Georgia 241,387
2 Florida 221,905
3 California 214,028
4 New York 200,375
5 Texas 141,672
6 Washington 116,210
7 Pennsylvania 75,557
8 Illinois 72,993
9 Kentucky 69,069
10 New Jersey 68,685
11 North Carolina 56,193
12 Virginia 53,396
13 Ohio 50,548
14 Michigan 47,438
15 Maryland 44,491
16 Massachusetts 44,467
17 Minnesota 40,427
18 Louisiana 40,268
19 Wisconsin 38,582
20 Oklahoma 32,794
21 South Carolina 32,513
22 Arizona 31,795
23 Oregon 31,737
24 Indiana 30,691
25 Tennessee 29,308
26 Missouri 28,939

The 18 states with the highest “Insured Unemployment Rates”

The national average “insured unemployment rate” for the week ended May 2 ticked up to 15.7% from the prior week’s revised 15.4%, according to the Labor Department today. The record in the pre-Covid-19 era was 7.0% in May 1975.

The table below lists the 18 states where the rate was higher than the national average. But the state data lags one week behind the national average and is for the week ended April 25.

California exploded onto this list with a mind-boggling leap in the insured unemployment rate, from 10.9% in the prior week to 27.7% in this reporting week. Clearly, some catching up with the data was being done here. In total, there are now 4.8 million insured unemployed in California.

Seven states had insured unemployment rates of over 20%:

Insured Unemployment Rate by state, week ended April 25
1 California 27.7%
2 Michigan 23.1%
3 Nevada 22.0%
4 Pennsylvania 21.2%
5 Rhode Island 20.6%
6 Georgia 20.2%
7 Vermont 20.0%
8 New York 18.6%
9 Connecticut 18.0%
10 Washington 18.0%
11 New Hampshire 17.8%
12 Puerto Rico 17.0%
13 West Virginia 16.5%
14 Louisiana 16.4%
15 Alaska 16.2%
16 Oregon 16.1%
17 New Jersey 16.0%
18 Massachusetts 16.0%

Reconciling weekly “insured unemployed” with the unemployed in the jobs report.

The number of “insured unemployed” in today’s report is based on UI claims. By contrast, the number of unemployed released in the monthly jobs report is based on household surveys and does not reflect UI. Not all of the people who are out of a job and are looking for work, as identified by the household survey, are receiving UI benefits. Generally, there is a large difference between the two.

But under the stimulus package, the UI benefits have been expanded to workers who were not eligible before. And the number of “insured unemployed” of 22.8 million is relatively close to the number of unemployed in the jobs report for April, 22.3 million.

However, the jobs report for April, released on May 8, lagged by nearly one month, with the survey data referencing the week between April 12th through April 18th. Since then, there have been many more layoffs, some of which are now showing up in the “insured unemployed.” Both reports lag to some extent – and in both report the number of unemployed is already over 22 million.

The reasons behind the Fed’s No-NIRP stance: It doesn’t work and kills bank stocks. One of the most revealing statements. Read… What Powell said About Negative Interest Rates, Their Effect on Banks, Jawboning, and Why the Fed Might Not Buy a Lot of Junk Bonds

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  171 comments for “Week 8 of the Collapse of the U.S. Labor Market: Nearing a Previously Unthinkably Deep Bottom?

  1. 2banana says:

    The “unthinkably deep bottom has been found” will be politically based on when states open and allow folks to go back to work.

    “If this trend is confirmed over the next few weeks, it would indicate that the current unemployment crisis is getting worse at a much slower rate than before. And when it stops getting worse, it would indicate that some of sort previously unthinkably deep bottom has been found.”

    • andy says:

      The silver lining is that the Big Tech giants (like the New Sears, the New Blockbuster, and the Trillion-dollar ad agencies) are making all time highs.
      SP500 top 5 are bigger than the bottom 350. Thats were economy is for index investors.

    • MCH says:

      I think at this point, reopening the states might not matter, there has been so much fear instilled regarding C19, that even if everything reopened tomorrow, people and businesses are going to want to play it safe….


      At this rate, the safest job on the planet will be journalists.

      • Dave says:

        That is true for sure. The damage is done! Too many people are very afraid. When I go to the grocery store it isn’t busy at all. People are at home I guess.

      • Wisdom Seeker says:

        Media reporters are getting whacked too, because they get paid by ad spending … from the other businesses that have been shut down.

        (I didn’t use “journalists” because that professional quality in reporting has largely been lost from the major media. The average article nowadays is so heavily weighted down with propaganda, spin, bias and opinion-stated-as-fact that the truth can no longer float to the top. Fortunately the profession has guys like Wolf and a few other holdouts and upstarts to carry the ball.)

        • Lisa_Hooker says:

          Journalists typically write their opinion about observations. Reporters, of which few remain, report both sides and work at being unbiased reporting news and facts, unlike a journalists view of daily activities.

        • MCH says:

          My personal opinion is that there are very few real journalists left. Nowadays, everyone has a narrative, there are very few journalist who I like, one of them is Chris Wallace, he has his opinions, but he tries to talk about things objectively, and isn’t trying to put his own little opinion in on everything.

          I really hate it when the so called journalist are cheerleading one side or the other, or worse, try to cover up their opinions with their “facts”. At that point, they’re simply another A**hole.

        • faifo says:

          It is with a heavy heart that I agree with the much respected Irish Times journalist Fintan O’Toole. The USA is being destroyed by its leaders, and the world can only look on with pity. God bless you all.

      • vancoverite says:

        Great point coming from a thinker not a follower like the rest :)

  2. Rick says:

    Another rally day on the worse that Han expected unemployment number. What’s that make 7 rally’s in 7 worse than expected numbers? Who even needs an economy when we have central banks rigging stock prices from falling too far for too long. If having no jobs or economy doesn’t bring the market down, what ever could possibly do it?

    • Joe in LA says:

      Zombies are coming out the sewers in Los Angeles. That’s a traditional buy signal.

      • TruckMan says:

        The market thinks the horsemen comin’ over the ridge are The Magnificent 7, but look closely..there’s only four of them ;)

        • BuySome says:

          Just the market’s problem with astigmatism…the four are carrying bouquets of dead roses in both hands. The shapes blur into extra riders.

        • Stuart says:

          Yeah, Trump, Pence, Pelosi and Schumer.

        • Billy-bob says:


          Best comment yet (anywhere) on current conditions.


    • DeerInHeadlights says:

      I think it’s just a typical BTFD rally after two straight days of losses. I wouldn’t be surprised if goes back into negative tomorrow.

      • andy says:

        Will you be surprised to see Nasdaq around 4000 by next summer?

        • DeerInHeadlights says:

          I wouldn’t be but being that the markets can remain detached from reality for quite a long period of time, anything is possible.

    • MonkeyBusiness says:

      Looks like the Fed is starting to buy Corporate Bond ETFs.

      Amount is modest, but they are following through.

    • Dave says:

      Nothing. We have to keep dancing until the music stops. I think I heard that somewhere.

  3. Duane says:

    Yesterday, Fed Chair Jerome Powell said that almost 40 percent of households making under $40K annually had lost a job in March. (he said that at a webinar at the Peterson Institute for International Economics).

    • Wisdom Seeker says:

      Yes, this is something that most people won’t get – the job losses are not evenly distributed. What was once merely wealth inequality has now become a matter of survival for half the country. The leading edge of the new economic-justice protest movement is already far more motivated and stronger than the Tea Party and Occupy Wall Street folks were.

      • Tony22 says:

        Does that mean that with my modest social security and savings—-I can finally get some servants, and, a concubine, or two while I’m at it?

    • Old-school says:

      David Stockman routinely showed that the number of good “breadwinner” jobs had not changed from 20 years ago at just over 70 million and that much of the job gains in this recovery we’re in the lower paid retail, bar and restaurant businesses. Sounds like those “non-essential” jobs were the first to be flushed. Don’t think many are coming back.

      • Ken Armstrong says:

        Bars managed to survive prohibition I doubt coronavirus will be able to kill them off.

        • Trent says:

          Ah but Ken we weren’t printing insane amounts of money just to stay in place then. They’ve been printing money and keeping credit easy for the last 20 years just to keep this house of cards from falling. I think globalization on all levels is over unless an insanely cheap source of energy is found very soon. Economies will re-localize at some point.

  4. BuySome says:

    Somehow it all begins to look like a seasonal ranking of powerhouse football teams. Get yer tickets here!

  5. Phoenix_Ikki says:

    You can always count on the market to be that insensitive jerkoff that piss over people’s graves. 3M more filed, worse than forecast and just as predictable, market up almost 200pts and probably end the day higher. Even just for optics, at least have the day go flat, seems like every week with unemployment filed numbers, market finds a sadistic way to celebrate.

    • Kent says:

      Higher unemployment rates mean workers willing to take drastic pay cuts and willing to be treated like dirt! Lots of shareholder value in all of this if you know where to look for it.

      • Petunia says:

        Back in 2010 in FL, I know of employers who cut their usual $10hr wage back to $8hr. The people who hired on at $8hr couldn’t even afford to get to work. Some got fired for missing work because they couldn’t afford the gas.

        • Wisdom Seeker says:

          Thanks Petunia. Now I know the real reason why they eviscerated personal finance (“Home economics”) from high schools. I’d always figured it was more about getting people to be dopey enough to borrow more than they could repay. But most people can’t take on that much debt and there aren’t that many bankers. However, there are lots of greedy employers. And when workers are so financially stupid that they don’t flat-out refuse a job that actually costs them money, employers can get away with paying them a lot less.

    • Billy-bob says:

      Let them eat guillotine!

  6. MF says:

    Hard to tell if California is just hit harder or just more efficient at processing claims. You’d think Texas would be up there too, but maybe it’s more protected by the oil industry.

    • BenX says:

      It’s population size.

    • Suzie Alcatrez says:

      In case you have forgotten, oil is now at $26 a barrel. There are only 374 oil rigs active right now vs 988 one year ago. About 1/2 of those are in Texas.

      I would not be surprised if prices go negative next Tuesday.

      • roddy6667 says:

        How many of those rigs are fracking operations that lose money but survive by the Bernie Madoff style financing? Also, fracking has a depletion rate that resembles the flight of a lead balloon.

    • Steppenwolf says:

      Have you heard the one about the oil price?

  7. Michael Engel says:

    Nancy fix is three more crumbs for Trump.
    If the GDP slump to $15T – $16T and Nancy fix reach $28T, 28 : 15 = => Debt/GDP = x 1.87

  8. Paulo says:

    Great article about a terrible situation. As my wife and I resist the pull of feeling down and depressed about the World changing 180 deg in just two months, (downward), we are steadily reminded that it is much much worse for millions of people, perhaps billions across the globe.


    I haven’t a freaking clue how to get to the acceptance stage of this destruction. Coping, okay because there is no choice…but acceptance? And what on earth can a newly unemployed lower paid individual do in this pandemic, going forward? These people need help, and everything we can give them.

    As Dr Bonnie Henry says to us daily with every news briefing, “This is our time to be kind, to be calm, and to be safe.” Articles like this provide the data. Our hearts must imagine the consequences and solutions.


    • HD says:

      If you have the means, be as structural as possible in the help you can give. Better to donate money, food or stuff to local charities, food distribution and the like than to one particular person in need, family or friends excepted. Think local and act practical. There will be hidden misery somewhere near your home and in these unprecedented times governments will fall short in providing relief.

      Above all, be resilient.

      • Stuart says:


      • Wisdom Seeker says:

        Donating helps, but “hiring” is good too (maybe even better).

        Find the local businesses that are restarting, and buy whatever you reasonably can to keep them going.

        Find the unemployed workers, and hire them to do whatever you got that needs doing.

        Both of those will turn “unemployed” charity recipients back into employed workers.

        And even if you haven’t got much to give to charity, volunteer.

        • Tony22 says:

          “buy whatever you reasonably can to keep them going…” and USE CASH, so that they have the option of reporting it, or not, depending on how their government has served them.

          Worried about virus contaminated cash?
          Microwave it until the top bill in the pile curls. Same with conventional oven. Don’t let them use the virus as an excuse for this sign at the door:
          “No shirt,
          no shoes,
          no mask,
          no smartphone switched on,
          with full telemetry (WiFi, Bluetooth and GPS) plus tracker app installed and running to make your purchases
          — no service”

      • Fat Chewer. says:

        Not where I come from. The food bank near my house is like a supermarket for some. They ain’t poor. Most charities these days skim off a huge proportion of the donations for “adminstrative costs”. I would rather give my money to someone who REALLY needs it.

        • Adam says:

          Around here some proof of poverty is provided to the food bank, then you have an account set up.

          I would personally fell pretty low if I was going to that trouble to take food out of someones belly, or their kids.

    • Engin-ear says:

      How to “accept”? Interesting question.

      Acceptance is a psychollogical issue. Most of people get to accceptance by just sitting on their hands. In severe cases people develp a PTSD, but that is another matter.

      So acceptance is the question of time and biology.

      But I believe that your real question is about what lesson to learn and what to to immediatly to cope with the situation in best possible way.

      For me is to listen to rare people like Wolf. They are deeply insightful.

  9. TruckMan says:

    Hardly unthinkable; I’ve mentioned a near-to-medium term economic collapse several times. The fact is that there is neither competence nor resilience left in world authorities. That a virus has triggered it now is almost immaterial, because any major trigger event could have caused it. The jenga tower is wobbling, adding another block is impossible, and it’s going to collapse shortly. I hope you are all watching from a safe distance.

    • Old-school says:

      The creative destruction of a market economy is a tough master for most of us. It unleases it’s might in a recession. If you are unfortunate enough to suffer it’s ravages try to dust yourself off and look for another opportunity. The world keeps on changing and so must we so we resist the path of a Luddite.

      • Adam says:

        Where is the “market” in this economy.

        Absent QE the world would already be very different, we’ve used it so we don’t have to change/adapt.

        That doesn’t mean it’s over tomorrow or next week, but my belief is that things under the surface have shifted greatly.

    • Trent says:

      Thank you for this! And we should not let them remain in place when we finally get this settled. Don’t let them point and say it was the viruses fault

    • Engin-ear says:

      Please develop your understanding of the term “economic collapse”.

      I would say that
      1. Stocks making -80% is an accounting collapse.
      2. Real economy making -30% is a recession.

  10. These numbers (state by state) are meaningless while there is no correlation, not geographically, not industry wide, not COVID 19 cases. The difference between 20% and 16% is nothing probably. This is a national problem and deferring responsibility at the federal level is wrong. The Senate’s recalcitrance on state aid is more partisanship. They seem to be taking flak for it too. Health, Financial, Political, the meter swings.

    • Jdog says:

      I do not think anyone in the conservative states are supporting bailing out the lavish public pensions of the liberals and public unions.

      If the liberals want to give public employees million+ dollar pensions, then they should step up and fund them and not expect others to pay their bills..

      • Suzie Alcatrez says:

        Pension problems are not limited to ‘liberals’.

        • Ed C. says:

          Suzie, no just states run by liberal democrat politicians. My brother’s state pension from NY State is rather plush indeed. My pension from a corporate job is quite meager by comparison. We are both engineers.

        • Zantetsu says:

          Ed. C. why are you comparing apples to oranges? Compare public pension to public pension since that’s what’s being talked about.

          Firefighters, policemen, and other professions that benefit from hero worship are I expect just as well pensioned everywhere. Maybe I am wrong though, I’d be happy to learn the facts.

      • AlamedaRenter says:

        Well, that’s not at all what is being proposed by any gov’t agency that I ‘m aware. Not a single politician has said any COVID money would go to pensions.

        This would plug holes in the 2-year budget.

        • Ed C says:

          A-renter: And you don’t think that any of those ‘holes’ might relate to excessive pension obligations?

        • Wisdom Seeker says:

          Alameda – The State of Illinois has flat out asked FedGov for a comprehensive state bailout, including pensions and without (so far as I can tell) ever actually contemplating the idea of reducing the benefit levels or even the payout-stuffing abuse rampant in their pension scheme.

          This wasn’t the already-spent COVID money though, this is an all-new bailout request.

          But you can also consider the entire Wall Street bailout as an indirect bailout of the pensions, b/c that’s where the pensioners’ assets are parked in all their glorious trillion$.

        • Old-school says:

          Just shows whoever has the printing machine has a lot of friends with their hands out.

      • Portia says:

        Pension funds should not be subject to the grift and vagaries of the Market. Or the grift and vagaries of PE, takeovers, asset stripping, I can’t cover all the ways they are stolen.
        They should be in a dedicated, interest bearing account, inaccessible to the vultures. Then no one would have to “cover” them.

        • MCH says:

          Heheh, pension funds in a dedicated interest bearing account… hilarious.

          Check out CALPERS, and get an idea of how all that money is actually managed.

          Hint: it isn’t a big Wells Fargo account.

        • Engin-ear says:

          Pensions…should be viewed as what they are : a promise made by inviduals knowng perfectly that they will not be held accountable for the outcome.

          On the bright side, all debt restructuring tools (including haircuts) are applicable to pensions.

          So the problem is manageable.

      • Kurtismayfield says:

        NYC Firefighter and Police are as “Conservative” as you can get, and they have zero problem suckling at the rest of public pensions while finding another gig after 20 years.

        Then there is the military.

        Your use of “liberal” is just more culture war jargon that is out of date

        • Ed C says:

          KM — those public unions had their way with guess who — democrat politicians who count unions as a prime constituency. It’s not culture war, it’s rotten political reality.

      • timbers says:

        Amazing how you and others keep bringing up pensions in response to state & local aid, when that is not what is being proposed. Where do you get your talking points…the Pete Peterson Institute that Powell spoke at?

      • roddy6667 says:

        What are these “conservative states” of which you speak?

      • Fat Chewer. says:

        So if you guys aint liberal democrats, what are you, considering you live in a liberal democracy?

  11. Tom10 says:

    Thankfully WI supremes opened up business. I’m sure that will have Madison and the state of Dane attempting to lock down until global warming is reversed.

    Will be nice to see that open sign and familiar bar stool tonight

    • Dan Romig says:


      If you live in Wisconsin, bars are open.

      From what I’ve seen on the Washington Post, it doesn’t look to smart to be packed in a crowded bar with no masks anywhere to be seen and people passing around bottles and glasses.

      “We’re the Wild West.” was Governor Ever’s take on things in his state’s bars.

      • Dan Romig says:

        And it doesn’t look too smart to not be able to spell.

      • tom10 says:

        I’ll take the wild west over confinement. Evers can stay in the bunker.
        We will let him know when its all clear to come out.

      • Candyman says:

        Washington post??? As a source of truth?? In your dreams.

        • Dan Romig says:

          Agreed Candyman.

          I have the same opinion of the New York Times.

          Wisdom Seeker, Lisa_Hooker & MCH commented on ‘Journalists vs Reporters’ above and I thought those were well made distinctions.

          Most of us have our biases and opinions, but as Lisa says, “Reporters, … report both sides.”

          I would say that Wolf tells it like it is, but he also sprinkles in what he thinks of what he sees, and I enjoy his reporting – biases and opinions included. His take on Congress and the activities of the Fed just happen to be mine as well! Thank you Wolf.

          I hope I’ve spelled correctly this time …

  12. Cas127 says:


    Would it be a problem to post the 18 states with the lowest unemployment rates or maybe just all 50 states?

    It would be helpful for context and relocation.

    • Wolf Richter says:

      Lota work… since I have to do this manually, not copy and paste. I might do it next time though. Also, the numbers are going to get more accurate as the new claims start slowing down and unemployment offices can catch up. That’s a real issue with the rate, which jumps around a lot at the state level… see California’s rate.

      • TruckMan says:

        Thanks for your efforts, Wolf.
        Needless to say that the data that matters is not being presented clearly by either Government or the MSM.
        I know a lot more about Excel than I did last year ;) Maybe you do too.

    • Wisdom Seeker says:

      Following the “teach a man to fish” approach – state listing of unemployment rates – might need to wait for data to update:


      • Wolf Richter says:

        State unemployment rates always lag behind. California’s April unemployment rate will be released on May 22 by the California EDD with details, based on the LBS data. I’ll cover it because it also shows labor force data, and that already fell in March, as people are leaving. So this will be an interesting report. I’ll do Silicon Valley, San Francisco, LA County, and CA overall.

  13. Seneca's cliff says:

    The scary thing is this is just the first stage of the crisis. The next shoe to drop is jobs at state, county and municipal governments who have seen their tax revenues and fee’s crater. The governor in Oregon has admitted that the job cuts will be big, but is waiting on the official state revenue forecast on May 20 to figure out how big the cuts will be. I assume other states and cities will do the same.

    • Wolf Richter says:

      I just listened to Calif Gov. Newsom talk about the budget nightmare. California’s rainy day fund of $21 billion is going to be used up in a few months. So now that budget is being re-aligned with the new reality. The first year of a downturn is always the easiest. It gets tougher as the years pile on because by then all the fatty deposits have been cut out, and you’re having to cut into muscle and bone.

      • MCH says:

        I think we should all be thankful for Brown putting in the rainy day fund. Otherwise, this would be much worse.

        I suppose the only other comparable is a major earthquake that hits either LA or SF. But those would be localized events where the rest of the country can support the devastated region to some extent.

        Whether people agreed with Brown or not, his second run at governorship has been pretty good for the state fiscally. (high speed rail not withstanding)

        • Jdog says:

          Brown’s policies are what pushed me out of the State, along with many other taxpayers.. What you are seeing in CA is the flight of upper class productive people, being replaced by homeless and illegal aliens.
          A lot of California is starting to look like a third world country. It is truly depressing.
          Leaving was the best decision I made in a long time…

        • MCH says:


          From my POV, Arnold did a horrible job with the state. Brown inherited the mess, and he cleaned up a little. Then Davis before him was not much better.

          There are lots of things that is challenging with CA. The problem has always one of majority rule, where one party dominate the power structure and the other party is essentially useless. Then all the stupidities and excesses come into play, and nobody can reverse the problem.

          I saw a preview of this in the 80s in Hawaii, when the Democrats essentially took full control of the state, and then the place went to the dogs. The situation is even worse now there.

          CA hasn’t gotten that way completely yet, but it’s well on the way, it is probably what Hawaii was like in the 80s in terms of power structure and such. And that’s not a good thing.

      • Michael says:

        No mention that it was his fault for the shut down

      • Clockwork Orange says:

        If only there were some native corporate behemoths with 12 digit bank accounts that could be axed to chip in.

  14. Petunia says:

    While most of the world is experiencing economic collapse, the luxury goods brands are quietly jacking up their already obscene prices. For the fashionista crowd it’s a WTF moment. Reports are that prices are up to 25%. Maybe the 1% are now the 2% and nobody told the 20% on unemployment.

    • 2banana says:

      So don’t buy their silly “designer label” overpriced stuff.

      This is literally the smallest detail of an epic self inflicted economic calamity.

      • jon says:

        Very true but a lot of people are brand slaves. I am more of a value conscious buyer and don’t mind paying a premium for a better value.

      • Petunia says:

        I come from a working class family, we always head for the sale rack first.

    • andy says:

      If prices are going up the fashionistas can sell their Goodwill donations on Poshmark app.

    • Thomas Roberts says:


      For anyone who has the money still, because, they cannot spend the money on expensive vacations or other things, they might be willing to spend more money on luxury goods/clothes. Also, for those who were well off enough, that would normally be more concerned with buying things more expensive than those goods, might also be spending down on those luxury goods, instead of other expensive items like cars.

      I’m not saying it’s a wise purchase either way. And, i’m sure a bunch of not so well off are purchasing that stuff as well, because, of stress or stupidity. I’m not sure the mix of whose buying those brands you are talking about. I don’t follow the fashionista crowd.

      • Petunia says:

        The reason I brought up the price increases is because the luxury goods markets are behaving just like the stock market. They are disconnecting more and more from real valuations.

        Jacking up the price of a 5K handbag to 7K means they think they can get it. The bags may be nice but the price doesn’t reflect the quality or the service provided. The price is simply a reflection of how much money has gone to the top income levels. This during the time the bottom is falling out from under the middle class.

        The dirty little secret of these businesses is they really make their money off of the low end customers who buy the perfume and lipsticks.

        • sunny129 says:

          There is NEED, ENOUGH and then ‘WANTS’ which is infinite!

          For a minimalist, the status symbol by possessing and displaying those ‘expensive’ stuff a sign of AFFLUENZA. No cure for this!

        • Cas127 says:

          “Jacking up the price of a 5K handbag to 7K means they think they can get it.”

          Or is could also mean that they have lost the bottom x% of their customer base and are trying to keep revenue constant by jacking up the price on the remaining even less price sensitive customers.

          Brands are constantly playing with the price-sales volume trade off, trying to maximize revenue.

          This is even more true for products priced far, far above their actual production costs – since it is the only the buying customers perception of worth that drives the price…not production cost.

        • Petunia says:


          Nobody needs an ETF or a REIT.

        • Old-school says:

          I remember in an economics class that some products don’t follow the normal pricing demand curve. Can’t remember much about it but I am thinking perfume was one such item. You know you just don’t feel too valuable if your perfume is priced too cheap.

        • Lisa_Hooker says:

          Interesting. I would never have thought that demand for high-end goods would be inelastic. Apparently when a day’s pay is 5k$ or 7k$ or 10k$ you buy whatever little things you want. Your needs were taken care of long ago.

    • R Hughes says:

      A significant reason for these purchases is to be able to show off the item(s) at the restaurant, track, sporting event, dance, concert, opera or so forth. Not much effect having your Gucci or puchi or who ever if all you are doing is walking around your house, no one to try and impress.

      • Petunia says:

        Most of my designer items would be unrecognizable to the untrained eye.

      • Thomas Roberts says:

        Cannot forget about “””social media”””, there are plenty of meaningless ways online to show off, even more so during a pandemic. This is especially helpful if you cannot really afford that bag to start with, and after purchasing said bag, you cannot afford to leave the house.

        I can imagine the ad; “feeling sad and anxious about the pandemic?, did you lose or are afraid of losing your job/husbands job?, want to show your “friends” how well you’re doing on Instagram? Gucci can solve your problems.”

      • Old-school says:

        It is a real part of being a human being and marketing folks are all over it. We are all trying to impress in one way or another.

        • TruckMan says:

          Writing all instead of most is far too common these days, and “most people I know” would be more accurate still. Get out of your bubble.

        • Lisa_Hooker says:

          TM – and I would get a kick out of “marketing folks are most over it.”

    • Engin-ear says:

      The wealthy individuals have a developped financial intuition : they should smell that the financial resdistribution is coming… so better burn the money than leave to somebody else.

      Or high end marketing research showed that eir clients made x2 on the crisis and that the prices should be aligned.


  15. Stephen says:

    I see my state (FL) is #2. We have made at least the top 5 in every week since the ‘lockdown began. of course, the good governor here has been silent on the massive unemployment claims. Apparently, he does not understand that the Florida economy IS service industry plus tourism. So, he closes down the state and the service and tourism sectors are decimated. Voila!

    Btw, here is a ‘boots on the ground’ report on FL. Things are slow here. Many restaurants still closed and we still cannot go to the gym, although you can go to Cosco where hundreds of people pass through the store everyday, fingering the merchandise that you will eventually purchase. So, gyms are not sanitary enough but Cosco is?

    Not that the FL tourism industry was not going to get walloped anyway, but the governor here has not helped this state. Many productive and healthy Floridians just want to get on with their lives. 200K plus unemployed a week will not end well!

    • Wolf Richter says:


      “So, gyms are not sanitary enough but Cosco is?”

      That’s not the issue. Costco sells food. Food is essential for human existence and therefore worth taking a larger risk for. You can survive without the gym for a while (you can work out outside). But you cannot survive without food for long. It’s a basic calculus behind the “essential” businesses.

      • Just Some Random Guy says:


        Fine so keep the food section open at Costco. But why does Cotsco get to sell clothes and TVs and laptops while local retailers are shut down? None of it makes any sense logically.

        • Wolf Richter says:

          Yes, I think that’s terribly unfair that Costco and Walmart can sell stuff because they have food, and a specialty store without food cannot sell the same stuff and has to close. It makes sense why food needs to be sold, but it’s terribly unfair to the other stores. Just as unfair as what the Fed is doing — shoveling money towards asset holders and bailing out big companies. There is no fairness in any of this. Lots of little people are getting screwed for the benefit of asset holders, always have been though…

        • Saltcreep says:

          Hey, I was actully wondering just earlier today why more pharmacies in many places haven’t, temporarily at least, expanded the selection of products they normally offer for sale!

      • Just Some Random Guy says:

        Oh and weed shops were deemed “essential” as well in most if not all states where it’s legal. As were liquor stores. I guess people can’t survive without getting high or drunk?

        • Wolf Richter says:

          You got it. If you try to take my IPA away from me, I’m going to start a revolt ?

        • Prof. Emeritus says:

          I assume those are deemed ‘essential’ to prevent illegal dealers and illegal brewing. They don’t want Al Capones in this crisis.

    • Seen it all before, Bob says:

      In a gym, if you are doing it right, you are breathing heavily and spewing Covid all over the room. You are also sweating Covid all over the equipment.

      I rarely breathe heavily or sweat at Costco.

      I don’t plan on going to a gym until this is long long over.

      • MCH says:

        Have no fear, at the rate gyms are going bankrupt, there won’t be one to go back to soon.

        I recall hearing Gold’s filing for bankruptcy, and 24 Hr Fitness is also in trouble.

        • Caticorn says:

          24 hour fitness has sent out surveys to their instructors asking them to clean up after they teach a class at minimum wage when the gym reopens. Desantis will likely want gyms to reopen next week. Yet, the gyms promise to be clean and safe ..not likely. They cannot even find the staff to clean up properly in good times and now, they want instructors to clean up for minimum wage?

    • roddy6667 says:

      COSCO is China Ocean Shipping Company. Do you buy entire shipping containers of merchandise?

  16. Educated but Poor Millennial says:

    Reality is that we (including me ) and all the business owners are hoping to reopen and restart the economy with full throttle.

    Wake up!

    If this hope (dream) goes away, soon after, more people will be laid off permanently.

    • There is plenty of economic activity, it is not counted and not taxed. Whether you work for a non-profit or a franchise burger chain. The ranks of those working in volunteer America has probably doubled. It’s a government problem and there is no solution, while corporations pay no taxes. What’s the point of herding people back into an NYSE listed company? To justify their stock valuations?

    • MF says:

      Agree that maintaining hope is critical to getting things restarted successfully. However, comparing the employment plunge to the shipping plunge, there’s a decent chance that up to half of the initial claims may roll off quickly.

      Some industries have come to a screeching halt while others have mashed the accelerator. It’ll probably take a few months for labor to get realigned to where the new needs are.

      I’m keeping my fingers crossed for now.

  17. Educated but Poor Millennial says:

    March unemployment rate has not been revised in yet, still shows a number posted for early days of April!


    • Educated but Poor Millennial says:

      I should say “early days of March!” , please forgive me for my mistake.

  18. David Hall says:

    The infection rate curve has flattened. Businesses are restarting. JC Penny will not reopen. A large Latin American airline declared bankruptcy. Grocery prices spiked 2.6% month to month in April.

  19. HR01 says:

    Thanks, Wolf.

    Uglier and uglier.

    BTW, still the Fed has not purchased a single corporate bond or ETF. Secondary credit bucket still shows zero.

    Fed continues to jawbone.

    • sunny 129 says:

      Those who bought these various bond ETFs, before the jawboning are all happy that ‘jaw boning’ is working! B/c most of them are up especially IG rated but as much HYG kind.

      For while, short duration and intermediate were doing better than long term. But since Tuesday, they all are up.

      Without healthy CREDIT mkt there cannot be healthy Equity mk! Look at all the COs issuing new bonds! Fed thinks this is better than bailing them out!

    • sunny129 says:

      NO more jawboning! Fed did the REAL thing!

      The Fed’s Visible Hand: Powell Buys $305 Million In ETFs In Two Days

      In the first two days the program was operational, the Fed purchased $305 million under the Corporate Credit Facility, i.e., the corporate bond ETF buying program, as of EOD May 13, or just two days after the Fed officially gave Blackrock the green light to start waving it in.

      Bloomberg’s ETF expert, Eric Blachunas, was sure he had observed the Fed in action two days ago when he noticed a jump in both LQD and HYG volumes around mid-day, which appears to be the time Blackrock will be active in the market for all those who feel like frontrunning the world’s largest asset manager, which in turn is frontrunning the world’s largest central bank.

      • Lisa_Hooker says:

        $305 million is a rounding error these days. That’s ~0.01% of 3 trillion.

  20. Seneca's cliff says:

    The workers and front line employees in many industries are cut first in a sharp slowdown and then middle management and technical departments follow some months later. For instance here in PDX ,Daimler Trucks has not publicly announced any job cuts in their headquarters management, sales and engineering staff though truck sales are in the toilet. Under Armor announced major job cuts but Nike and Adidas have not made any public cuts or furloughs despite being in the same retail space as UA. B&M stores are closed all over the world and sports are shut down (the promotional arm of these companies). Yes, they are doing online sales but the entire sports apparel complex has got to be sucking wind in this pandemic. So I would expect the job cuts are coming in these major PDX employers.

    • Old-school says:

      I think I understand how things work enough to know that a 2 to 3 month shutdown of a lot of the economy is creating real problems but government can fill the hole.

      If of it doesn’t open up in a few months a lot of permanent damage is going to happen that is going to be great depression like. It’s going to feed on itself in a doomsday loop with bankruptcy all over the place including personal, business and city.

  21. Just Some Random Guy says:


    How about an analysis of this by states that have re-opened vs those that refuse to re-open?

  22. Trinacria says:

    Wolf: thanks more this info. You show the unemployed initial claims at 36.84 million. I looked up the US labor force and the number I find is 164.6 million. So if we take 36.84 + assume there were 6 million unemployed before the shutdown / 164.6 = 26% – is this the national unemployment rate? I see that at the height of the depression, circa 1932/33 it hit 24.8% ; but took several years to get there. So, my question boils down to what is the REAL unemployment rate at this point? Is the 26% accurate? Thanks. PS: this is truly a heart-braking series of events, which will affect society for years to come. Hoping for a silver lining for folks.

    • Wolf Richter says:

      The math doesn’t work that way. The “initial claims” total over the past 8 weeks (36.8 million) is not the total number of unemployed since some of those people got their old jobs back or found new jobs. A better but lagging number would be “continued claims” of 22.8 million. This lags a couple of weeks, and there have been more layoffs. I think when the dust settles and the numbers catch up with reality, we’ll see a national unemployment rate over 20%.

  23. Michael Engel says:

    1) The Total of 22.8M unemployed might have a 40% – 50% correction, before election.
    2) It will not drop to the previous paradise lows of 2m for a long time. The trend is strong. The trend is up. It will lead to another new all time high.
    3) When WTI < $30 – $50 oil co will go BK, because wall street will be in troubles.
    4) At 30% – 60% capacity, business cannot make a buck. It will take time, but many businesses will give up.
    6) Since public transportation is infectious, transportation cost will be higher, despite low WTI.
    Tolls and parking in major cities are expensive.
    7) The combine cost of private & business RE expenses is very high, while its hard to make living.
    8) When major bank landing online reach 70% normal volume, who need branches with their employees. Bank branches are band aids covering vacant spaces, at street level wounds, during recessions.
    9) Corona -19 is a hybrid of SAAR & Aids. There is no vaccine for either of them.
    10) Round #1 of high Debt/GDP is probably over. When more employees will be on the unemployment and the food lines, round #2 will lift Debt/GDP to imaginary new all time high. That overextended level might cause a global debt explosion.

    • Nicholas Wojtow says:

      To your point many businesses can’t make a buck, especially restaurants, unless they get those full booked/fully crowded Friday night Sat night crowds. Those days are GONE!

      • Xabier says:

        There is already a gallery in London selling paintings from ‘those seemingly distant days of packed bars and restaurants’. The artist specializes in that sort of scene.

        I wonder whether I shall ever again sit in the 18th century wood-panelled room of my favourite old pub? Doesn’t seem very likely!

    • Engin-ear says:

      Would you suggest that our near future is current Greece?

      The only thing that came back to “normal” 10 years after 2008-2011 is Greece government bonds.

      Everything else is in “tears-n-blood’ – stock, RE, GDP.

  24. Wendy says:

    How can unemployment and equities be simultaneously spiking? I kept wondering if the world had gone mad, but realized that the majority of those that lost their jobs, were not equity holders to start with. Only when the wealthy feel the pain, stocks will normalize. I can wait.

    • Old-school says:

      What is the sp500 worth when the 10 year is 0.6%? Wish I knew. I hear ranges from 500 to 5000.

  25. SocalJim says:

    Most of the jobs lost are in low income stuff or in startups linked to stupid ideas, and these folks are mostly renters. Most everyone else is fine.

    • Icanwalk says:

      Gig economy may have over 50 million unemployed. While some may be doubly employed (can’t make it on one job) add this to the first 50 million getting Unemployment Insurance.

      Add enough 50 millions, and pretty soon we are talking real numbers.

      I don’t think most everyone else is fine.

    • jon says:

      I agree real estate would be untouched so what the unemployment rate is above 20%

      • Tom Stone says:

        Jon, you might take the time to read Wolf’s recent post on Bay Area Real Estate.
        Or Nick Corbishey;s recent post on what’s happening with overseas Real Estate Markets.
        And keep in mind that this is just the beginning, it’s going to be at least 3 years before a workable vaccine is widely available according to Laurie Garrett.
        IF everything goes well.

        • Wisdom Seeker says:

          Tom, I read Jon’s comment as being 100% stealth-tongue-in-cheek evisceration of SocalJim’s throwing 25% of the nation under the bus as “low income”, “dumb ideas”, “renters”.

          SocalJim isn’t just being insensitive, though, he’s totally overlooking the fact that those “low income” workers were largely young folks supposed to move up the ladder, that those startups were supposed to be the next Unicorns millionaire-machines, and those renters were supposed to be the next Buyers.

          Meanwhile, COVID is creating a wave of forced sellers (by multiplying the mortality rate of the current crop of elderly homeowners) … and the complete halt of travel has decimated the ranks of capital-flight buyers overseas.

          The good news is that the housing stock is all still there and someone’s gotta own it, so at the right price everything will sell.

      • SocalJim says:

        jon, I never said that. Several times, I have said COVID will create some real estate winners, and some real estate losers. That is right. A COVID safer property in a jobs rich area will be in big demand by the money people. They will do well.

        And COVID prone protery will get hit hard. Likely, multi-family rental is going to take a hit for two reasons. First, multi-family is not the place to be because of COVID. Also, that demographic is taking a majority of layoffs. In my opinion, multi-family rental is a LOSER.

      • Old-school says:

        I will paraphrase what Buffet said “if you got no customers, you got no business”

    • Trinacria says:

      Seems like a pretty broad and sweeping statement (and even somewhat harsh) with regard to what appears to be over 40 million unemployed. Lord knows we can’t touch that “sacred cow” know as real estate…even if in our dreams.

    • MCH says:

      Let me know how that works out. This is a big domino effect going on here, the so called low income stuff makes up a good portion of the economy. They get taken out, then the next tier will go.

      Let me put it this way. Those low income guys still need a place right? If they go, what do you think happens to the price of the rentals? Then what do you think happens to the price of real estate.

      Nobody is truly immune to stuff like this unless you happen to be Bill Gates, and there aren’t enough of those to save the economy.

    • Anthony A. says:


      The oil and gas industry and the equipment suppliers to it are made up of a large percentage of high paid workers. My DIL just lost her $125K per year oil and gas accounting job. She is a single Mom, over 50, and probably will never see another job like that again.

      Then there are the airlines and auto companies (and suppliers). ETC!

      • SocalJim says:

        I read through a wall street research report and this was part of the summary. The article went on to point out that this may be a big problem for multi-family buildings and the mortgage paper backing the loans. While what you say is true, according to the article, professionals are much less impacted than low income service workers and jobs financed with venture capital.

        • Icanwalk says:


          Seems like if you are an airline pilot you could be looking for work. Seems like that is a profession?

          Relative works for cancer doctor. Laid off. Doctor can’t risk compromising her patients.

          Hospitals cut back on everything. Lots of staff laid off. Doctors not doing elective surgeries.

          This is far reaching.

        • sunny129 says:

          Multi-Apts and multi-Family type type REITs are getting hit b/c of corona threat!
          Warehouse and cold storage – reits in demand.

        • Jdog says:

          Anyone who is not still wet behind the ears, like the writer of your research article seems to be, knows all business is linked.
          So called “professionals” usually feed off the money earned by the lower classed workers who actually produce something….
          loose one, and you have no use for the other.
          In addition, the professionals are more likely to lose everything in the coming market crash.

        • WES says:

          Nice to know that the sun is shinning “Somewhere”.

        • Trinacria says:

          maybe at the rate things are going the last reits standing will be the prison reits.

      • Lisa_Hooker says:

        My high-tech engineer friends that lost jobs in 2008-2010 after the GFC eventually found work. Typically at 25% less than they were making in 2006.

    • Seneca's cliff says:

      I don’t agree that the carnage will be limited to the low income and startups. In fact I have a hard time thinking of any occupations that won’t be affected if this goes on for the 18 months to 2 years it will take to get a vaccine or herd immunity. Perhaps high voltage linemen, sewage treatment plant operators and Amazon Execs will be spared, but not much else.

      • Xabier says:

        I suspect that you are right: unlike 2008, this will really hammer everyone, and many who thought themselves secure will fall permanently to a lower class, or utter destitution.

        • Trent says:

          They can’t make a vaccine for the regular flu and they’ll be able to make one for this?

  26. Yancey Ward says:

    This is purely anecdotal, but I have a relative that has to refile every single week because her job is week to week- she doesn’t know how many hours she will get. So, she never quite makes it to “continuing claims”, but is always a new claim in the numbers. Given her job, I would think she isn’t unique in any way.

  27. CCC says:

    I’m not one of them, but I’m wondering how 10k-30k soon to be unemployed airline pilots are going to do other work and replace their good salaries. Uber?

    • MonkeyBusiness says:

      Uber now has a service that allows riders to select a helicopter as their means of travel.

      Failing that, we can always go to war with some nation, and those pilots will be retrained as fighter jet pilots or something ……

      • CCC says:

        I think I heard most air combat lately was drones, but I guess they could do that. It’s tricky for them I think because they are paid white collar wages but are not really knowledge workers. So hard to shift to something else with comparable wages.

    • Old-school says:

      You know I am reminded of the story of John Law. The French government was already in too much trouble before he came along and convinced them he had the solution with a dishonest money scheme. He finally built it all on the Mississippi stock certificate bust that took it all down

      Our John Law would just be a composite of the last four Fed chairs until the Virus bust. Would be fitting if one of the last things the Fed buys would be Unicorn shares before we join the history books.

  28. BuySome says:

    Debt is Energy Negative. It draws from Energy Positive..Assets. It cannot be faulted nor diluted*, but only transferred and usually in the form of misery for people (again, Assets which have taken and stored positive energy inputs). War is Debt. It only adds to the problem and destroys assets. Not an option for this problem…big debts due = big payment time and you could not add more debt to this. This requires new thinking as it will not go away on its’ own. Shell games are failing.
    *Interest rate dilution gets debt off books but not negative energies…they are persistent and do not dissipate.

    • Adam says:

      Diluting debt would be inflation?

      • Trent says:

        Yes in a sense. When you never let debt default at meaningful levels you get inflation for assets and deflation for workers (their wages). Letting debt default would bring on massive asset deflation. That is what our “betters” are scared of.

    • Tony22 says:

      And interest is always paid from real income, if you are a plebe.

      If you are a gild, then you just get another loan to pay the old interest and principle.

  29. kleen says:

    This virus is here to stay. No one knows what this thing is, Doctors are trying to figure out how to treat people and every week there’s some new findings. But for now, there aren’t any experts on Covid19. We are all learning as we go.

  30. Tony22 says:

    Visited a friend in a wealthy area in southern Marin.
    Practically every other house had a pickup truck in front of it; audio-visual installations, construction, gardening, painting, repairs, lots of AAA trucks jump starting dead cars, etc.

    Wonder how many of those workmen were doing it for cash while they got unemployment? Not that there’s anything wrong with that!

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