I’ve been scratching my head for a long time wondering how the tally of new unemployment claims can continue at skyhigh catastrophe levels while the unemployment rate has not gone vastly higher than it already has.

Head scratching from another direction – Number of new claims is steady at a level that is at least six times higher than it was right before the pandemic started yet the number of people drawing unemployment is declining.

How can that be?

Think I have finally sorted out the answer after several weeks of looking at additional data:

• The number of new jobs created each week is running far higher than the number of lost jobs.

To get to this point for yourself, compare the number of people drawing unemployment with the change from week to week, add in the number of new unemployment claims, and then plug the difference as people who have gone back to work meaning they have found a job. It is too early for people to dropping off unemployment because their allowed weeks gas run out so the change in people drawing unemployment has to be new jobs. Let me know if I missed something in this concept.

Here is my analysis of the number of people drawing unemployment, the number of new claims, and the resulting number of new jobs:

 week new back to # drawing ended claims work unempl. 6/13/2020 1.54 20.29 6/20/2020 1.48 2.54 19.23 6/27/2020 1.41 1.88 18.76 7/4/2020 1.31 2.31 17.76 7/11/2020 1.30 1.72 17.34

Data source

Weekly press release from the Department of labor: Unemployment insurance weekly claims

Number of people drawing unemployment

Here is the weekly tally of people drawing unemployment, which is revised in the subsequent week:

Wow, I sure don’t understand what is happening.  The headline unemployment rate declined 2.2% in June. That is a big drop.

At the same time, new claims for unemployment were 6.01 million for the four weeks ending 6/27/20. See previous post: New unemployment claims barely decline in week ending 6/27/20.

(How to put that information together? Well, the reason I’m blogging is to put my thoughts into writing, which forces me to think deeper in order to sort out what is going on around me.)

The U-3 unemployment rate in last four months with change from previous month:

 march 4.4 april 14.7 10.3 may 13.3 (1.4) june 11.1 (2.2)

That is a 2.6% drop in two months after a 10.3% rise in April.

Wow.

Graph above shows key unemployment rates since the start of 2019.

This discussion will be posted at several of my blogs.

For longer term perspective, consider the rates since before the Great Recession:

New unemployment claims for week ending 6/27/20 were 1.427M, down slightly from 1.480M the previous week. That is five weeks of between 1.4M and 1.9M following ten weeks of between 2.1M and 6.9M new claims.

The impact of new claims is mitigated by the number of people getting rehired which leads to the calculation of ongoing payments for unemployment.

• 20.29M revised down from 20.5M- 6/13/20
• 19.23M revised down from 19.52M – 6/20/20
• 19.29M – 6/27/20 (a rare and exquisitely unexpected typo refers to this as the 6/20 week)

That shows the number of people finding new jobs is running higher than the number of people losing their jobs.

This discussion will be posted at several of my blogs.

My tally of data:

New unemployment claims for week ending 6/20/20 were 1.480M, down slightly from 1.540M the previous week, which was revised upward from 1.508M.

The impact of new claims is mitigated by the number of people getting rehired. That leads to the calculation of ongoing payments for unemployment which are:

• 20.5M, revised to 20.289M – 6/13/20
• 19.52M – 6/20/20

This discussion will be posted on several of my blogs.

Data:

The headline unemployment rate declined to 13.3% from 14.7% in April. Rates for both months are a dramatic increase from the 3.5% rate in February.

The only way I can square this data with the massive volume of new unemployment claims is that a lot of people are getting new jobs after being furloughed. That is the only way the U3 is not above 20%.

So, my tentative guess is the economy is actually starting to recover, in spite of efforts of multiple governors to keep the economy in their states shut down.

Misclassification error in data understates unemployment

A new phenomenon in the age of shutdown is arising from the way the data is accumulated. The unemployment rate is determined by a large survey.

Turns out people are answering the question of their unemployment status as “employed but absent from work.” In normal times, that means a person is on vacation, thus actually employed.

In this shattered economy that means you got laid off or furloughed but are still getting paid by your employer or perhaps highly enhanced unemployment. People in that category are actually unemployed but are counted in the statistical data as employed.

I’ve run out of adjectives to describe the economic mess created by the shutdown.

New unemployment claims for week ending 6/13/20 were 1.508 million, seasonally adjusted, down from revised 1.566 million the previous week.

My tally of data:

• 45.69 M – seasonally adjusted new claims since the economy was shut down – that is up 4.96 million in three weeks
•   9.28 M  – new claims for unemployment by people who otherwise aren’t eligible for unemployment – self-employed and independent contractors
• 54.97 M – total of seasonally adjusted plus independent contractors and self-employed people

Number of new claims for unemployment as percent of February civilian labor force:

A useful adjective to describe the devastation we are seeing in the job market escapes me.

New unemployment claims for week ending 5/16/20 were 2.12 million, seasonally adjusted. Nearly as many, 1.19 million who are not otherwise eligible unemployment filed for Pandemic Unemployment Assistance (PUA) in the week.

That’s somewhere around 3.3 million people who lost their job in week 10 of the shutdown.

My tally of data:

• 40.73M – seasonally adjusted new claims since the economy was put in an induced coma
• 6.82M – new claims for unemployment by people who otherwise aren’t eligible for unemployment – self-employed and independent contractors
• 47.55M – total of seasonally adjusted plus independent contractors and self-employed people out of work since shutdown began

Number of new unemployment claims is a tally equal to about one fourth (24.8%) of the civilian labor force in February. Independent contractors and self-employed people who are out of work is now equal to about 4% of the February civilian labor market.

That means about three out of ten people who were in the civilian labor force in February are now out of a job (28.9%).

If you haven’t passed out from the shock of those numbers, (more…)

The damage from the lockdown is spreading. More news is emerging about the devastation that took place in just the first full month of the closure.

The damage will continue to grow the longer the shutdown continues. At some point it will start compounding, growing at a faster rate out of proportion to the time that is passing. Keeping the economy closed now is unnecessarily so the compounding damage is a choice.

Merely a few of the articles in recent days:

• Guess on GDP shrinkage in next quarter
• Disproportionate number of poorer households hit by job losses
• Collapse of tax revenue in New York state
• Collapse of home sales in Southern California
• Another retail chain announce store closures and another announces liquidation

It is imperative to reopen the economy in full, not just for ‘curb-side delivery.’ If we don’t open soon, I fear the following articles will be mild in comparison to what we will see in the future.

This discussion will be posted on several of my blogs.

5/16/20 – Fox Business – US GDP could sink over 40%: Atlanta Fed – Federal Reserve Bank of Atlanta is forecasting a 42.8% drop in GDP for the second quarter of  2020.

I don’t have any word that can describe this disaster:

New unemployment claims for week ending 5/16/20 are just under 2.5 million, seasonally adjusted. An additional 2.2 million people who wouldn’t usually be qualified for unemployment filed during the week for Panemic Unemployment Assistance. The new PUA tally is shocking.

The tally of seasonally adjusted new claims is 38.6 million since the economy was put in an induced coma.

Data:

Weekly press release from the Department of labor: Unemployment insurance weekly claims

3/21/20– Wall Street Journal – Workers file 2.4 Million Unemployment Claims

Summary of new claims and running total

Here is my running tally of the new unemployment claims.

The continuing lockdown is directly leading to a decline in health. Large volume of articles for many weeks now have been pointing this out.

This is second of two posts describing recent articles. Part 1 here. This will be posted on several of my blogs.

5/11/20 – Wall Street Journal – Medical Lockdown Will Cause a Disease Surge – Two practicing MDs point out that lots of people have not sought treatment during the pandemic for initial signs of some other form of illness. There will be a surge of people visiting doctors after the lockdown ends. Six or eight weeks of delay will not be an issue for many people but for others it will make their illness far worse and for some, unrecoverable.

The continuing lockdown is directly leading to a decline in public health. Large volume of articles for many weeks now have been pointing this out.

This is first of two posts describing just a sampling of recent articles. This will be posted on several of my blogs.

5/19/20 – A Doctor a Day letter-signed; letter to Pres. Trump signed by over 500 doctors – You can read the letter yourself at the link.

A mass casualty incident is currently underway in the United States.

Letter explains the assessment protocol in a catastrophe:

“During a mass casualty incident, victims are immediately triaged to black, red, yellow, or green. The first group, triage level black, includes those who require too many resources to save during a mass crisis. The red group has severe injuries that are survivable with treatment, the yellow group has serious injuries that are not immediately life threatening, and the green group has minor injuries.”

Goal of medical providers during such a catastrophe is to focus treatment on the red group while making sure the yellow and green groups do not deteriorate a level.

Assessment by the doctors of where we are in the United States?

Red – millions of Americans are currently at triage level red. There are normally 150,000 Americans who are given a cancer assessment each month.

We now have two months of no testing which means there are over 300,000 Americans who have detectable cancer, don’t know it, and have not started any treatment. An unknown but calculable number of those will die because of the lack of testing during the shutdown.

Our very form of existence as the United States of America is based on the idea that the power of government is based on having consent of the governed. In other words we, free citizens, give government the power it has.

Phrased more eloquently, the Declaration of Independence declares:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, …

We are beginning to see damage to trust in public policy and confidence in government. Governors who continue to keep their economies locked up when there is no consent to do so and no justification for doing so are whittling away at that “consent of the governed” concept.

Politicians urgently need to pay attention to this. There is danger of long-term damage which nobody is going to like. More on the risks at the end of this post.

The growing resistance to the harshness of state policies is becoming more visible with each day that passes.

This discussion will be posted on several of my blogs.

Many churches planning to open in California on May 31

I just came across this issue in the news. It has been brewing for a couple of weeks.

5/7/20 – San Bernardino Sun – Evangelical church leaders vow to reopen sanctuary doors early in Southern California – A number of churches in Southern California will be resuming worship services on May 31. I recognize several of the quoted pastors as being from churches in my local area.

On my daily walk yesterday I noticed a girl’s softball team (high school or younger) practicing. In other corner of park, six or eight boys were in football scrimmage (high school age). At another park I noticed a boy’s baseball team (elementary school age) practicing and half a dozen high school age boys working on their pitching arms. Also saw a few coaches, one coach, six parents, one coach, and one coach. Not a mask in sight.

I have noticed surface traffic on main streets in my area is picking up over the last week or two. Have had opportunity to be on the freeway during evening commute time recently and noticed the traffic volume has definitely picked up over what it was a couple weeks ago.

Other indications compliance with statewide house arrest is evaporating:

5/16/20 – Daily Bulletin – Some Inland Empire businesses reopened – defying coronavirus orders – Reporter was able to find eight businesses in Riverside and San Bernardino counties that have opened. Officials report they received a number of complaints about some of those businesses.

Lots of people are starting to make guesses on what the impact will be from the pandemic on different industries over the next few years. No guess is better than another, so here is some speculation for your consideration.

The longer the economy of major states stay closed by deliberate choice of multiple governors the worse the effect is going to be. At some point there will be a disproportionately compounding effect with every extra week.

Discussion in this post brings together speculation for

• higher education,
• retail, and
• airlines.

This discussion will be posted on several of my blogs.

Higher Education

A flood of articles are discussing damage to the higher education world. Eventually all colleges and universities will concede they have to refund something in the range of half a semester of room and board.

More institutions are getting pressure, if not getting served with litigation papers, to refund a portion of Spring 2020 tuition. Pressure is growing to discount tuition in the fall if classes are held online.

There is a growing probability there will be a severe impact over the next few years. One of many articles discussing the possibilities:

5/11/20 – New York Magazine/Intelligencer – The Coming Disruption/Scott Galloway predicts a handful of elite cyborg universities will soon monopolize higher education – One commentator perceives there has been a substantial drop in the value, price, and product of higher education.

Multiple states, including New York, New Jersey, and Pennsylvania required nursing homes to admit or readmit people who were sick with Covid-19. A lot of articles have appeared describing the impact of these intentional policies.

In case you are like me and have a hard time believing reports that government officials would knowingly implement such policies, a copy of the New York order is provided above.

Just a small selection of the articles appearing of late:

5/13/20 – Newsweek – Pennsylvania Health Secretary moved mother out of nursing home as coronavirus death toll increased in state – The Health Secretary of Pennsylvania, Dr. Rachel Levine relocated her mother out of a care facility as the death tally of senior citizens in care facilities increased.

Pennsylvania is one of the states that ordered care facilities to admit people who were COVID-19 positive and thus contagious.

5/13/20 – Daily Wire – Some States Forced Nursing Homes To Accept Corona virus Patients. Many Died As A Result. This Is A Massive Scandal. – Pennsylvania, New Jersey, New York, and California all required that nursing homes take in people who were COVID-19 positive.