Another week, another deluge of jobless claims.
Unfortunately, an additional 3.84 million Americans filed for unemployment benefits last week, as the economic fallout from a near-nationwide lockdown tied to coronavirus containment protocols rolls on. The previous week was revised up to 4,442,000.
The latest claims data is worse than feared. Economists were looking for 3.5 million on the headline. Notably, this week’s total is larger than the week of March 21, when things started to spiral in earnest.
The implied jobless rate is around 22%, more than double the worst levels seen during the financial crisis and nearly as high as the Great Depression.
Last week’s total is a stunning number by reference to any historical precedent outside of the current deep recession. But, in keeping with the trend, it does suggest that claims may have peaked late last month.
With some states already reopening businesses and the Paycheck Protection Program topped up, there’s some rationale for cautious optimism.
The six-week total (i.e., capturing most of the lost jobs during the panic) is 30.3 million.
The next chart is familiar to readers. Assuming the recession began in Q1 of 2020 (i.e., taking December’s non-farm payrolls report as the last data point), the US created around 20.5 million jobs over the longest expansion in history which, going by the NBER’s official start date, began in June of 2009.
Not only has America seen the entirety of those gains effectively wiped off the board, but updating the visual with the six-week sum tallied over the course of the ongoing crisis shows a net loss of nearly 10 million.
Again, I would remind readers that is by no means a definitive assessment. And there’s quite a bit of implicit extrapolation, but it helps to put the last six weeks in perspective. It also gives you a window into just how troubling the April jobs report will invariably be.
Here is an updated chart that shows the comparison with the previous record for weekly claims.
Going forward, the assumption is that between the tentative reopening underway in some states and the various government programs aimed at keeping Americans on payrolls, the bleeding will slow, and eventually stop.
The problem, though, is that the nature of this crisis likely means consumption habits have been forever altered.
If society has, in fact, changed, and people interact with each other differently going forward, there may never be a full recovery for the mighty US services sector.
That’s not an effort to make things sound worse than they really are. It’s just an assessment of the prevailing circumstances.