New Unemployment claims top 2 Million for 10 straight weeks

Ten-Week Total 

The ten-week running total of initial claims is 40.732 million. 

However, some of those workers have been called back as states have opened. Also some people submitted claims and were not really eligible. 

Continuing claims paint a better picture at this point as to what is happening.

Continued Unemployment Claims

First Dip in 9 Weeks

Continued claims lag new claims by one week. They took their first dip in 9 weeks. 

For the week ending May 16, continued claims were 21,052,000 down from 24,912,000 for the week ending May 9.

BLS Reference Week

The reference week for the BLS Household Survey unemployment report is the week that contains the 12th of the month. It is that week's survey that determines the unemployment rate.

For the May Jobs Report coming out Friday, June 5, the reference week was May 10 through May 16.

Household Data from April Jobs Report

As noted on May 9, there was a 6.4 Million Discrepancy Between Employment and Unemployment.

The BLS is very aware they published a bogus unemployment number for April and issued this notice.

If the workers who were recorded as employed but absent from work due to “other reasons” (over and above the number absent for other reasons in a typical April) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been almost 5 percentage points higher than reported (on a not seasonally adjusted basis). However, according to usual practice, the data from the household survey are accepted as recorded. To maintain data integrity, no ad hoc actions are taken to reclassify survey responses.

Data Integrity

To maintain "data integrity" the BLS reported a number known to be bogus. 

There is still more to this BLS fiddling saga. 

Click on the preceding link for details about Seasonal Adjustments and an unusual statement regarding their Birth-Death model adjustments.

Unemployment Rate Calculation

For a change, we have a solid reference point on which to make an advance estimate of the unemployment rate.

If we assume the number of unemployed is roughly equal to the number of continued claims (likely +- a few million) and we also assume the BLS will do a better job this month of elicting the correct answers (questionable), we can calculate the unemployment rate as follows:

Unemployment Rate = (Unemployed / Labor Force) * 100

UR = (21.052 million / 156.481 million) * 100 = 13.5%

If so, that would be down from 14.7% in April. 

The equation makes an additional assumption that the Labor Force will not change much and the BLS does not further mess with their Birth-Death model.

Given the assumptions, a range of 12%-17% seems about right.

Regardless, there will be a long road to job recovery as noted by recent reports.

Boeing is the Tip of the Layoff Iceberg

Please consider Boeing is the Tip of the Layoff Iceberg

Yesterday, Boeing announced over 12,000 Layoffs in the wake of plane cancellations and dearth of new orders.

Also note 114,327 Retail Job Cuts, Most on Record, as More Stores File Bankruptcy.

Retailers Pier 1 Imports, JC Penney, J. Crew, and Neiman Marcus have all filed for bankruptcy. 

Malls in general are dying. 9,300 stores closed in 2019, breaking the record of 8,000 store closures in 2018. According to Coresight Research, another 15,000 stores could close in 2020.

The energy and service sectors are also hard hit. 

How many people will soon go back to their old ways of dining out as much, going to the movies, getting their nails done, singing karaoke?

Fed Can Print Money But It Cannot Print Jobs

That's a nice saying but I did not come up with it. I can find at least three instances dating back to 2010.

Belts and Suspenders

However, I can claim a sarcastic Don't Worry, the Fed has Belts and Suspenders

Unfortunately, all the Fed is doing is creating zombie corporations unable to survive expect with permanently low interest rates.

Grim Economic Data

1. May 8: Over 20 Million Jobs Lost As Unemployment Rises Most In History
2. May 15: Retail Sales Plunge Way More Than Expected
3. May 15: Industrial Production Declines Most in 101 Years
4. May 15: GDPNow Forecasts the Economy Shrank by a Record 42%. It's 40.4% as of May 28.

Ripple Impacts May Last Years

The economic data has been grim and the ripple impacts may last for years.

Global COVID-19 Risk Ranges Up to $82 Trillion

To understand the total global risk, please see Global COVID-19 Risk Ranges Up to $82 Trillion

Ripple Impacts

For a detailed synopsis of the state of the economy and the ripple impacts, please see The Economy Will Not Soon Return to Normal: Here's Why.