As Virus Jobless Claims Total Nears 40 Million, Let’s Make Sure We’re Asking The Right Questions
Another 2.44 million Americans filed for unemployment benefits last week, as the economic devastation from COVID-19 continues to exact a severe toll on the US labor market more than nine weeks on from the first apocalyptic set of jobless claims figures.
The previous week's numbers (which were marred by a clerical error in Connecticut and other possible anomalies) was revised down by 294,000 to 2.69 million from 2.98 million.
The four-week average is now 3.042 million, down by about 500,000.
But, but, but … weren’t the expectations for 2.5 million? At 2.438 it’s a beat! A buy signal! Gotta run and load up on Apple stock.
Actually, consensus was 2.4. This was a miss. But still buy Apple. lol
and as always, … there are actual real human beings (lives) behind the numbers – not just integers in a spreadsheet
Yes I suspect that a great many fast food and chain restaurants are doomed. The big boys like McDonalds and of course delivery focused pizza chains will do ok but driving around town I see plenty of places that just cannot well adapt who do not have drive through or takeout focused menus and who take to long to turn tables to survive with 50% reduced customer seating. 20-25% of restaurants are almost certainly going under by the end of summer. Additionally there is risk to microbreweries given the degree to which distribution is regulated and bars.
Brick and Mortar is likely to be heavily affected by how much you can pivot to online sources like Target, Walmart and of course Amazon. I would be worried about best buy for starters. JC Pennys is already down, Macy’s might have sufficient online presence but anything you see mostly in malls is a possible casualty. I would guess Bezos has a bunch of clothing brands in his sites. Imagine if they had internal designer brands like target does.
Note Torsten Slok this morning: The long fat tail in the profile of job losses during this pandemic suggests that layoffs are no longer just because of the economy shutting down and a backlog of claims being processed. Instead, the fact that we still lost 2.4mn jobs last week after nine weeks of COVID-19 suggests that what is going on is a more permanent reallocation of workers away from jobs in industries that require a high degree of face-to-face and close physical interaction
Like any big shock the adjustment happens more quickly – a lot of these losses were going to happen- over 5 years maybe not 5 weeks for many businesses- the hospitality/restaurant business is a one off and would not have happened without a virus. And the economy would have had time to adjust to all the mayhem. You see major adjustments after shocks- see the GFC and the Great Depression. We are about to have another major realignment. That is the flaw in the “creative destruction argument”. If it happens all at once it is not creative- just destructive. Regards Scott Frew…
Our local hospital in the last couple of weeks announced furloughs, layoffs, and salary reductions.
People are going to restaurants again and nursing homes are episodically having outbreaks with 34-50% mortality.
I think we messed up big as a country.
I live in a small coastal town with a few great restaurants and coffee shops, as good as they are, these establishments depend heavily on locals to carry them during the off-season and tourists during the summer, most remain closed even though the virus did not hit my state hard compared to others (less than 80 fatalities statewide so far). I used to frequent my favorite coffee shop 4-5 days a week, they make a great latte and a superb pastrami egg sandwich ($12 total). During the lockdown I had no choice but to learn how to make decent coffee and actually got quite good at it. Even when the shop re-opens I don’t see myself making more than 2 trips a week, it’s simply easier to get my brew at home, the sandwich is another story. I’m certain variations of this behavior are countless among Americans across the country, our habits have changed, we will consume in different ways, I believe many are overly optimistic about the “return to normal” once every business has a chance to re-open, my bet is that 80% of job losses will not be temporary.