Another 2.123 million Americans filed for unemployment benefits last week, a reality check of sorts at a time when market participants are understandably keen to look ahead to better days as states reopen and economic activity resumes across the country.
Some of the language below is recycled from last week’s jobless claims update. That’s deliberate. It’s a nod to the fact that when it comes to America’s unemployment crisis, the situation is still quite dire for the masses, who are too busy worrying about whether they’ll be rehired or if Congress will extend additional benefits come July, to worry about the S&P’s bounce off the March lows.
The latest jobless claims data is a reminder that the economic devastation from COVID-19 continues to exact a severe toll on the US labor market, nearly three months on from the onset of the crisis.
The previous week’s figure was revised higher to 2.446 million from 2.438 million.
The four-week average is now 2.61 million, down by about 435,000 (yellow line in the figure above).
I’ve said it every week for two months, but it always bears repeating: There’s really no “silver lining” in this. Yes, the trend is lower. And the late-March peak won’t be revisited. But that’s small comfort. Three months into the crisis, the numbers are still multiples of anything witnessed prior to the epidemic.
The 10-week total is now nearly 41 million.
Let that sink in. 41 million people have lost their jobs in the space of less than three months. For comparison, that is nearly the entire population of Spain.
There was one bright spot in the report, although I would stop short of calling it a “silver lining”.
Continuing claims fell for the first time during the pandemic, dropping to 21.052 million in the week ending May 16 from 24.9 million.
The question here is not whether “the worst is over”. Nor is the question about the “pace” of the rebound. Obviously, the question is how structural this proves to be. Will people be rehired? Will people kept on payrolls by the Paycheck Protection Program ultimately be let go?
For now, I’ll just leave you with one last chart.