Tag Archives: Unemployment

40+ Million Americans Unemployed: Misery continues as 2.1 million new jobless claims filed last week

(Emily Craine) The unemployment toll caused by COVID-19 layoffs continues to rise with another 2.1 million American filing new jobless benefit claims last week – even as more businesses reopened and rehired some laid-off employees. 

More than 40 million new claims for unemployment benefits have been filed in the past two months ever since the coronavirus started paralyzing the US economy. 

It is the 10th straight week that new claims have been above 2 million, figures released by the Labor Department on Thursday show.  

While claims have declined steadily since hitting a record 6.867 million in late March, they have not registered below 2 million since then. 

Although the total figure for claims in more than 40 million, not all of them are still unemployed. The number of people currently receiving unemployment benefits is 21 million, which is a rough measure of the number of unemployed Americans. 

States are gradually restarting their economies by letting some businesses – from gyms, retail shops and restaurants to hair and nail salons – reopen with some restrictions. 

As some of these employers, including automakers, have recalled a portion of their laid-off employees, the number of people receiving unemployment benefits has fallen.

The unemployment toll caused by COVID-19 layoffs continues to rise with another 2.1 million American filing new jobless benefit claims last week. It is the 10th straight week that new claims have been above 2 million, figures released by the Labor Department on Thursday show.

More than 40 million new claims for unemployment benefits have been filed in the past two months when the coronavirus started paralyzing the US economy

The weekly jobless claims report, the most timely data on the economy’s health, is being watched to assess how quickly the economy rebounds after businesses shuttered in mid-March to control the spread of COVID-19 and almost ground the country to a halt. 

The number of claims – stuck at an astonishingly high level even as non-essential businesses are starting to reopen – suggest it could take a while for the economy to dig out of the coronavirus-induced slump despite signs from the housing market and manufacturing that the downturn was close to bottoming. 

Economists fear a second wave of private sector layoffs and job cuts by state and local governments whose budgets have been crushed contributed to last week’s unemployment claims.  

‘I am concerned that we are seeing a second round of private sector layoffs that, coupled with a rising number of public sector cut backs is driving up the number of people unemployed,’ said Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania.

‘If that is the case, given the pace of reopening, we could be in for an extended period of extraordinary high unemployment. And that means the recovery will be slower and will take a lot longer.’

The second wave of layoffs could grow bigger with Boeing announcing on Wednesday it was eliminating more than 12,000 US jobs and also disclosing it planned ‘several thousand remaining layoffs’ in the next few months.  

Meanwhile, Amazon.com Inc announced on Thursday it has plans to offer permanent jobs to about 70 percent of the workforce it has hired temporarily to meet consumer demand during the pandemic.

The world’s largest online retailer will begin telling 125,000 warehouse employees in June that they can keep their roles longer-term. The remaining 50,000 workers it has brought on will stay on seasonal contracts that last up to 11 months, a company spokeswoman said.

California, Washington, New York and Florida saw the biggest increases in new claims, according to the latest Labor Department report. 

In California, where claims increased by 31,764, layoffs were most prominent in the service industry.

Layoffs in insurance, educational services and public administration industries were most common in Washington state where claims rose by 29,288.

The majority of layoffs in New York, which saw its claims increase by 24,543, were felt in the transportation and warehousing, educational services, and information industries. 

Florida’s layoffs increased by 2,322 and impacted industries included agriculture, forestry, fishing, and hunting, construction, manufacturing, wholesale trade, retail trade and service industries. 

Economists cautioned the 40 million figure does not represent the number of jobs lost due to the pandemic, citing technical difficulties and procedures at state unemployment offices.

The focus, instead, should be on the number of people still receiving unemployment benefits. These so-called continuing claims could shed light on the effectiveness of the government’s Paycheck Protection Program.

The PPP, part of a historic fiscal package worth nearly $3 trillion, offered businesses loans that could be partially forgiven if they were used for employee salaries.

The job cuts reflect an economy that was seized by the worst downturn since the Great Depression after the virus forced the widespread shutdown of businesses.  

‘Now is a good time to think how many of those people who lost their jobs are going to get them back, my sense is 25 percent will not and that’s what gives us the double digit unemployment rate well into 2021,’ said Joe Brusuelas, chief economist at RSM in New York. 

‘The bankruptcies of small and medium enterprises will result in a much higher rate of permanent layoffs.’

While claims have declined steadily since hitting a record 6.867 million in late March, they have not registered below 2 million since then. Pictured above in an unemployment office in Arkansas in April

The economy shrank at an even faster pace than initially estimated in the first three months of this year with economists continuing to expect a far worse outcome in the current April-June quarter. 

The Commerce Department reported Thursday that the gross domestic product, the broadest measure of economic health, fell at an annual rate of 5 percent in the first quarter, a bigger decline than the 4.8 percent drop first estimated a month ago. 

It was the biggest quarterly decline since an 8.4 percent fall in the fourth quarter of 2008 during the depths of the financial crisis. 

Analysts are monitoring incoming economic data to gauge how consumers are responding as many retail establishments gradually reopen.

Jobs won’t return in any significant way as long as Americans remain slow to resume spending at their previous levels. 

Data from Chase Bank credit and debit cards shows that consumers have slowly increased their spending since the government distributed stimulus checks in mid-April. 

Consumer spending had plunged 40 percent in March compared with a year earlier but has since rebounded to 20 percent below year-ago levels.

Most of that increase has occurred in online shopping, which has recovered to pre-virus levels after having tumbled about 20 percent. 

But offline spending, which makes up the vast majority of consumer spending, is still down 35 percent from a year ago, according to Chase, after having plummeted 50 percent at its lowest point.

Atlanta Fed Predicts A 50%+ GDP Collapse in 2Q20

Source: By EMILY CRANE FOR DAILYMAIL.COM

“A V-Shaped Recovery Will Not Be Possible”: Today’s Job Losses Reflect A 40% GDP Crash

Now that the worst jobless print and unemployment rate in US history are in the record books, the next questions are i) what does this mean for the US economy and ii) how long before things revert back to normal. 

Addressing the second question first, Morgan Stanley earlier this week laid out three scenarios, a bull, base and bear case. What is notable is that even the bull case sees a full recovery only in 2021. The base case tacks on another year to the recovery while the bear case sees double-digit unemployment into 2022 and onward.

Goldman agrees with Morgan Stanley, and even in its optimistic report that the US has now moved past the bottom (assuming the is no second round of closures in late 2020), the bank expects labor market slack to remain substantial even in late 2021 and entering 2022.

The bottom line here is that contrary to expectations for a quick return to normal, it will take years (if ever) before the unemployment rate recorded in late 2019 is back.

As for the first question, namely what is the economic impact from today’s catastrophic jobs report, here is the answer from Bloomberg’s Economic team:

“The extent of job losses is consistent with Bloomberg Economics’ modeling of a near 40% contraction in real GDP for the quarter. While layoffs were concentrated in sectors such as restaurants, hospitality and leisure, losses occurred in nearly all subcategories.”

As Bloomberg concludes:

“the breadth of job losses is a jarring signal of the massive challenge of restarting vast swaths of the economy – not just a few sectors – and it therefore serves as a stark indication that a ‘V-shaped’ recovery will not be possible.”

Meanwhile, stocks are now higher than they were a year ago, when the unemployment rate was about 3.5%. Thanks Fed.

Source: ZeroHedge

A Tragic Record: For The First Time Ever, More Than Half Of The US Population Is Not Working

Today’s jobs report was, as expected and as previously discussed, absolutely horrific, although as Bank of America points out there was one silver lining which Larry Kudlow quickly latched on to: with 72% of jobs lost being reflected as temporary layoffs, workers should be able to be more seamlessly rehired as the economy reopens. However, the longer this pandemic goes on, the more likely that what was temporary becomes permanent, and as ZeroHedge pointed out in a previous post, even baseline cases see unemployment not returning back to normal until 2022 or later.

Offsetting this “good news”, however, there was one especially scary aspect of today’s jobs report that has not gotten enough publicity, namely that as BofA writes, the employment to population ratio plunged to a record low, with only 51.3% of the population working. Inversely, this means that in April, 49% of the US population was not working.

Worst Jobs Report In History: 20.5 Million Jobs Lost As Unemployment Rate Hits Record 14.7%

It gets worse.

As a reminder, the BLS said that if the workers who were recorded as employed but absent from work due to “other reasons” had been classified as unemployed on temporary layoff, the overall unemployment rate would have been almost 5 percentage points higher than reported, meaning that the true unemployment rate as of this moment is 20%

White House economic adviser Kevin Hassett laid the groundwork for shocking the US population for this devastating reality, when he said in a CNN interview that next month’s jobs report “should be around 20%,” adding that the U-6, or the underemployment rate, will probably hit around 25% in the next report.

This means that the employment-to-population ratio is also under counted by about 4-5%, and that as of this moment (we will get the May jobs data in 1 month), the employment to population ratio is below 50%, indicating that for the first time in history, more than half of the US population is unemployed!

Which is great news for stocks: think of all the people who have nothing better to do than buy the fucking dip all day with all that helicopter money the Fed will be showering on them for the coming years.

Source: ZeroHedge

 

Here Come The Mass Layoffs: New York Unemployment Site Goes Down After “Tens Of Thousands” Lose Their Jobs

In many ways the US economy is currently in the eye of the coronavirus storm: cities and states are under quarantine lockdown, the CDC has prohibited any groupings of more than 50 people; stores, clubs, restaurants, bars and hotels are voluntarily shuttering indefinitely as the economy grinds to a halt and yet besides a tapestry of ghost cities across the nation, the immediate impact of the devastating viral storm on the service economy has yet to manifest itself.

But the hurricane is about to hit front and center, and the service-industry mecca of New York City is leading the way.

As the Daily News reports,New York’s unemployment website was overwhelmed Monday as the coronavirus pandemic put tens of thousands of people across the state out of work.

The flood of suddenly jobless workers hitting the Department of Labor website with applications for unemployment benefits was unleashed by a drastic move by Gov. Cuomo, who announced all of the state’s restaurants, bars, movie theaters, gyms and casinos would close by 8 p.m. Monday to contain the corona outbreak.

So many people tried to apply that the website crashed several times throughout the day, while the DOL’s hotline was so jammed up that callers seeking aid could not get through to someone who could handle their claim.

The unemployed can apply from 7:30 a.m. to 5 p.m. on weekdays. DOL spokeswoman Deanna Cohen said the department saw a “spike in volume comparable to post 9/11,” adding there are more than 700 staffers assigned to handle the high demand.

Gabe Friedman, unemployed drag queen

“I’m completely unable to log in and apply” said 26-year-old Gabe Friedman, a drag queen who performs under the name Kiki Ball-Change. “Me and so many other drag queens are completely out of work for at least two months. If I pay rent at the end of April, I would be broke.”

It’s not just the drag queens that find themselves with zero demand for their unique “skills”: tens of thousands of workers across New York’s service industries have already been, or are about to be let go as their employers are forced to either shut down permanently or hibernate until the economy recovers.

The DOL on Sunday waived a seven-day waiting period on unemployment benefits for people out of work due to coronavirus — but that concession proved to be moot as many people could not apply at all.

Rita Lee, 57, who works in the film industry (hopefully not as a drag king), said she started to apply Sunday night after movie productions shut down across the city. She hit a wall once applications opened Monday.

From 11 a.m. to 3 p.m. Lee tried and failed to apply on the website, saying she kept “getting either a system or server error message, or the page will never load.”

“I’ve called all the toll-free numbers, which are recordings that redirect you to a main menu or a message saying that all the operators are overloaded now and to call back,” said Lee. “Can’t reach a human to help.”

David Stollings, a sound engineer at a now-shuttered Broadway theater, called the situation a doozy. “I got the site to load once,” said Stollings. “Before this it was just not loading at all.”

Marnia Halasa, a Manhattan-based figure skating coach, said she was also unable to apply and became worried about paying rent. “What if I have to blow the New York popsicle joint and run back to Ohio to live with my father?,” asked Halasa, who’s lived in the city for 28 years.

* * *

While it is not clear how many New Yorkers will lose their jobs due to the pandemic, Empire Center founder E.J. McMahon told the NYDN the hit could be worse than the Great Recession of the late 2000s when roughly 370,000 people lost their jobs in a more than two-year span.

“The website crashed, that’s evidence that there has never been anything like this so quickly,” said McMahon. “You can fix a computer glitch. But I don’t think the problem is how the safety net operates. I think the problem is how the economy operates in the future for all these people.”

Incidentally, the chief economist of a multi-billion macro hedge fund advised us that they are now modeling approximately 10 million job losses over the next two to three months. We leave it up to readers to decide if that’s too little, too much or just right.

Source: ZeroHedge

Good Thing? US Treasury Curve Flattens To Zero As Unemployment Falls To Lowest Level Since 1969

Good thing! US unemployment has fallen to its lowest level since the 1960s.

The US Treasury 10-year – 3-month yield curve has flattened to zero as unemployment hits its 50 year low.

https://confoundedinterestnet.files.wordpress.com/2019/05/yc10u3.png

Is this signaling the end of a business cycle? Or is it signaling the excesses of central banking?

We are seeing turbulence in the US yield curve given the many economic uncertainties around the globe, like Brexit, China trade, etc.

https://confoundedinterestnet.files.wordpress.com/2019/05/usyc.png

At least devaluation of the US dollar Purchasing Power has slowed.

https://confoundedinterestnet.files.wordpress.com/2019/05/fed1913.png

Source: Confounded Interest

U.S. Jobless Claims Drop To 49 Year Low: Here Is One Reason Why

Another week, another near record low in initial jobless claims, which tumbled by 10,000 to 203K in the last week according to the BLS, below the consensus estimate of 213K, and down from 213K last week.

https://www.zerohedge.com/sites/default/files/inline-images/Initial%20Jobless%20Claims.jpg?itok=WGjp3cTy

As further indication of the vibrancy of the job market, continuing claims fell by 3k to 1.707m, the lowest since mid-June.

The data, which comes before tomorrow’s main jobs report, show employment continued to improve in late August although Jobless-claims figures tend to be more volatile around holidays, such as the U.S. Labor Day. Some doubt about tomorrow’s strong number crept in after today’s ADP Private Payrolls disappointed, sliding from 217K to 163K, far below the 200K expected, and the lowest print since last October.

https://www.zerohedge.com/sites/default/files/inline-images/Change-in-Nonfarm-Private-Employment-August-2018.gif?itok=7nuwBteg

Even so, the figures add to signs businesses are keeping existing staff and adding new workers to help meet demand being boosted by tax cuts in the 10th year of the economic expansion.

Then again, there may be another potential explanation, and as Southbay Research notes, the collapse in initial claims may be tied to Trump’s immigration policy.

According to Southbay, taking the year-over-year change in Initial Jobless Claims (inverse) and comparing it to the GDP y/y growth, the current pattern broadly matches historical patterns. But nominal Initial Jobless Claims are at ~50 year lows.  And that’s with a much larger working population. 

Compare this business cycle with the one in the 1990s:

  • Duration: ~10 years
  • GDP: 1990s GDP much stronger
  • Initial Jobless Claims Year 9 of recovery: 300K (2000) vs 210K (2018)

That is, the current cycle is strong but not as strong as the one in the 1990s.  But Jobless Claims have collapsed even lower. Why?

  • Not tied to duration: While Jobless Claims fall over time, both cycles have lasted roughly the same number of years
  • Not tied to GDP: If GDP were the sole determinant, then the 1990s would have had even lower Claims.

https://www.zerohedge.com/sites/default/files/inline-images/claims%20change.png?itok=9SbDez5h

Trump Economy & Immigration Policy

Sudden drop in welfare applications: From 2015-2017, Initial Claims were dropping at a steady nominal level of ~15K per year. Suddenly, in 2018, the pace has tripled: claims have fallen (-30K). What about 2018 is pushing down claims at the fastest rate in 4 years?

Tighter State Eligibility Requirements: Most entitlement programs are seeing a sharp drop this year.  A key driver has been funding: the Federal government is shifting the cost burden to the States.  In response, States have tightened eligibility; for example, many States are requiring food stamp applicants to show proof that the applicant is trying to find a job.

Immigrant Fear

Last year, the Trump administration surfaced a plan to penalize legal immigrants who use welfare (public housing, food stamps, medicaid, etc).  Under this plan, legal immigrants could have their status revoked.  Fear of that plan is causing many immigrants to shy away from using these entitlements, and from filing Jobless Claims.

In addition, undocumented immigrants are finding themselves under pressure from ICE. Applying for Jobless Claims means visiting government offices. And that has risk.

KEY POINT: A strong and sustained period of economic growth is pushing down Jobless Claims.  But the drop may not be as awesome as it seems.

Source: ZeroHedge


ADP Employment Growth Slows To Weakest In 10 Months

Having beaten expectations in July (and printed notably higher than payrolls), ADP employment growth was expected to slow in August and it did – more than expected. ADP printed +163k against expectations of +200k (down from July’s revised +217k).

This is the weakest employment growth since Oct 2017…

https://www.zerohedge.com/sites/default/files/inline-images/2018-09-06_5-18-07.jpg?itok=-4p8Q9bO

Medium-sized firms dominated the job gains in August as did Service-providing roles…

https://www.zerohedge.com/sites/default/files/inline-images/2018-09-06.png?itok=D6ThDkCG

“Although we saw a small slowdown in job growth the market remains incredibly dynamic,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

“Midsized businesses continue to be the engine of growth, adding nearly 70 percent of all jobs this month, and remain resilient in the current economic climate.”

Mark Zandi, chief economist of Moody’s Analytics, said,

“The job market is hot. Employers are aggressively competing to hold onto their existing workers and to find new ones. Small businesses are struggling the most in this competition, as they increasingly can’t fill open positions.”

Full Breakdown:

https://i1.wp.com/www.adpemploymentreport.com/2018/August/NER/images/infographic/main/NERinfographic-August2018.gif

Job growth is very broad – as measured by the BLS Diffusion index, employment breadth is the highest since 1998…

https://www.zerohedge.com/sites/default/files/inline-images/2018-09-06_5-14-36.jpg?itok=oaojqakr

On average during President Trump’s tenure, ADP has – on average – had no bias in its reporting compared to BLS data, this is notably different from the systemic under-reporting that ADP did relative to BLS during Obama’s tenure…

https://www.zerohedge.com/sites/default/files/inline-images/2018-09-06_5-11-18.jpg?itok=gxIegrbz

Of course, with a 96.3% chance of a September rate-hike priced in, today’s ADP (and tomorrow’s payrolls) print likely have little to no impact on monetary policy (Dec odds for another hike is 67.4%).

Source: ZeroHedge

‘Ghosting’ On The Rise As Workers Blow Off Interviews

In a clear but perhaps unwelcome, for companies, sign that the US job market is at its hottest in decades, applicants are increasingly “ghosting” interviews, resulting in employers getting more creative in their hiring and retention efforts after frustration in attracting ideal candidates is on the rise, according to a new report.

“Ghosting” is a term coined by millennials denoting cutting off all communication with friends or a date, with zero warning or notice before hand, including blocking social media communications and avoiding them in public. Job candidates and employees are now “ghosting” their jobs by way of ditching scheduled job interviews, or even not showing up on the first day of work, or disappearing from existing positions without notice or reason.  

https://www.zerohedge.com/sites/default/files/inline-images/Ghosting%20Office%20Space.jpg?itok=sER9fvup“Office Space” (1999) via Hollywood Reporter

That this is taking place at the same time as the quits rate hit an all time high, is probably not a surprise: we detailed the so-called “take this job and shove it” indicator from the latest JOLTS report earlier this month – it shows worker confidence that they can leave their current job and find a better paying job elsewhere. Well, according to the BLS, as of May, this number hit an all time high, rising from 3.349MM in April to 3.561MM in May, an increase of 212K in the month, the biggest monthly increase since December 2015.

https://www.zerohedge.com/sites/default/files/inline-images/quits%20jun%202018_0_0.jpg?itok=XeUZPZBt

Meanwhile, unemployment has reached an 18-year low of nearly 3.8%, with more job openings than unemployed people in May of this year — only the second month in the past two decades this has happened.

https://www.zerohedge.com/sites/default/files/inline-images/openings%20vs%20unemployed.jpg

As a result, employees increasingly find themselves holding all the cards as 2.4% of all those employed quitting their jobs, usually to take another preferred position, the largest share in 17 years.

https://www.zerohedge.com/sites/default/files/inline-images/Ghosting%20chart%201.png?itok=PH2QuxqH

One president of a major staffing firm in the New York City area, Dawn Fay, told USA Today that “up to 20 percent of white-collar workers” are no-shows at scheduled interviews as they find themselves with more options, and explained further:

To some extent, employees are giving employers a taste of their own medicine. During and after the Great Recession of 2007 to 2009, when unemployment reached 10 percent, many firms ignored job applicants and never followed up after interviews. “Candidates were very frustrated because they felt employers were ghosting on them,” Fay says.

Now it’s payback time as other staffing agencies recently profiled report that they see upwards of 60% of candidates with multiple offers in a market that’s now pit companies in a cut-throat race to attract talent. Some companies report experimenting with group interviews of 20 or 30 applicants or more, with the expectation that up to half may never show up. 

USA Today notes that “While no one formally tracks such antics, many businesses report that 20 to 50 percent of job applicants and workers are pulling no-shows in some form, forcing many firms to modify their hiring practices.”

https://www.zerohedge.com/sites/default/files/inline-images/unemployment%20NPR.png?itok=M1YmoktP

In one prominent online journal geared towards HR professionals and employers, company owners and headhunters rant over recent hiring frustrations

“Downright rude and unprofessional,” says Carl Schussler, managing principal of Mitigate Partners. “What happened to handwritten thank you notes and treating people with respect?”

Kathleen Downs, senior vice president with staffing and recruiting company Robert Half Finance & Accounting agrees with Bieler that candidates’ having multiple choices in today’s job market feeds into this new trend of professional ghosting. She explains that during the Great Recession, companies would receive 100 applications and choose to interview 15 of them. “Now they receive five or six resumes, and if they are fortunate enough to interview all, each of them would have had three or four previous interviews,” she says.

Leylek agrees. “We are now working with a candidate-driven market,” he says. “Candidates are in a position where they hold all the cards.”

For businesses all of this of course spells lost money, time, and wasted expenses as difficult to fill and skill set specific jobs stay vacant event longer. 

Some staffing firms speculate in recent reports that it could simply be a decline in manners among a younger generation more at home in a social media world of impersonal relations and the ease of “blocking” contact.

Employee Benefit News cites the reasons behind “ghosting” in the work world as that while “social media made reaching out to people easier, it also made it easier for candidates to just not reply back,” and that “the uncomfortable situation of delivering the rejection personally that plays into this.”

But more obviously, it’s not social media induced shyness that’s the culprit, but a natural confidence that comes with a robust and growing job market so perhaps ghosting is but the latest positive phenomenon in a resurgent economy. 

Source: ZeroHedge