Despite the hope-restoring nonfarm payrolls “recovery” and the over-hyped bounce in retail sales (ignoring the lack of ‘V’ in industrial production), in the last week 1.508million more Americans filed for unemployment benefits for the first time (notably worse than the 1.29mm expected).
That brings the thirteen-week total to 45.7million, dramatically more than at any period in American history. However, as the chart above shows, the second derivative has turned the corner (even though the 1.508million rise this last week is still higher than any other week in history outside of the pandemic)
Continuing Claims did drop very modestly but hardly a signal that “re-opening” is occurring! And definitely not confirming the payrolls data…
Texas and Nevada showed the worst deterioration in the labor market as Florida and Oklahoma showed the best improvement in claims last week…
And as we noted previously, what is most disturbing is that in the last thirteen weeks, more than twice as many Americans have filed for unemployment than jobs gained during the last decade since the end of the Great Recession… (22.13 million gained in a decade, 45.714million lost in 13 weeks)
Worse still, the final numbers will likely be worsened due to the bailout itself: as a reminder, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed on March 27, could contribute to new records being reached in coming weeks as it increases eligibility for jobless claims to self-employed and gig workers, extends the maximum number of weeks that one can receive benefits, and provides an additional $600 per week until July 31.
A recent WSJ article noted that this has created incentives for some businesses to temporarily furlough their employees, knowing that they will be covered financially as the economy is shutdown. Meanwhile, those making below $50k will generally be made whole and possibly be better off on unemployment benefits.
Additionally, families receiving food stamps can typically get a maximum benefit of $768, but through the increase in emergency benefits, the average five-person household can get an additional $240 monthly for buying food.
But, hey, there’s good news… stocks are near record highs and Treasury Secretary Steven Mnuchin said he anticipates most of the economy will restart by the end of August.
Finally, it is notable, we have lost 388 jobs for every confirmed US death from COVID-19 (117,717).
Was it worth it?
The big question remains – what happens when the $600 CARES Act bonuses stop flowing?