Nearly 1.9 million more Americans filed for unemployment benefits last week, as the country’s economic crisis rolls on for Main Street, if not for Wall Street.
At 1,877,000, the latest figure is worse than consensus, which was looking for a 1.833 million rise. Last week’s total was revised slightly higher to 2,126,000.
The disappointing numbers come ahead of the May jobs report and a day after an encouraging (if that’s what you want to call it) ADP report. The four-week moving average (yellow in the figure) is now 2.284 million, down around 325,000 on week.
Notably, the “silver lining” from the previous week’s report seems to have disappeared. Continuing claims rose 649,000 to 21.487 million in the week ending May 23.
That is not good news. The market was looking for 20 million there, so 21.49 million is a big miss, especially when you remember that these are people we’re talking about, not numbers, something I feel compelled to say each week.
Over the course of the crisis, almost 43 million Americans have filed.
I suppose I don’t have to say it again, but this is a disaster of proportions so epic that the English language fails as a sufficient tool to convey the scope of the tragedy.
We are now nearly three months into the deepest downturn in a century and jobless claims are still multiples of the previous weekly record set in 1982.
The nightmare scenario (obviously) is that once the Paycheck Protection Program effect wanes in a few months, claims will start rising again.
Hopefully, that will not be America’s reality, but some (many) are concerned about the idea that the vast majority of these job losses are “temporary”. We’ll get a fresh read on that Friday, but suffice to say that if consumer preferences have been altered irreversibly by the pandemic, and if demand remains depressed (even at the margins), we may begin to see signs that rehiring and efforts to keep workers on payrolls are impeded by scarring from the panic, leading to structurally higher unemployment.
Again, one hopes that is not our fate.
Is there data available that shows the amount of average weekly lost wages in each week’s unemployment report?
From scanning the news, it appears that more and more companies are cutting middle management positions and also stating that post-pandemic, they will remain leaner, with less employees.
Therefore, it seems that the first waves of unemployment were minimum and low wage workers and with each passing week, the unemployed is moving higher up the wage ladder.
If the average annual salary of the unemployed is $40,000/year (guess) and there are 43 million unemployed, then lost annual wages are $1.7T.
How much will stimulus (monetary and fiscal) will be required until the US economy gets back down to a 5% unemployment rate?
We might have no other option than to embrace UI, but I hope that it is done in a way that supplements a productive person (who might not earn a living wage) and does not pay someone to sit at home and not be productive- which can cause a lot of other problems.
UBI is coming or an economic depression of catastrophic proportions is. Automation is an unstoppable juggernaut. If a chinese factory working making $250USD per month is cheaper to automate… well there you go. RPA software is automating sales and customer service. It is only a matter of time before evolutionary software begins coding better than humans and likely engineering better than humans.
But it will be a long time before a computer provides better financial and social commentary than Mr. H! So one job is safe!