Displaying items by tag: labor
Some bad news on the jobs market emerged this week. In the weekly data, another 1.3m Americans applied for unemployment assistance. That number has stayed steady for weeks and shows no signs of abating. But it is other contextual info that makes that number worse. For instance, job openings are now declining, with total numbers in July down versus June. Growth in worker hours is also waning after growing for several weeks. Finally, google searches for “file for unemployment” are growing.
FINSUM: When you take all this together, a comprehensive picture is starting to show. It appears that the rising COVID cases may now be seriously putting a halt on the recovery.
There has been a quite a bit of consternation over the current labor market, and with good reason. Over a million people have applied for unemployment assistance ever week for over 4 months. All told, over 30 million people have lost their jobs. However, there is an encouraging trend: unlike in past recessions, there is still plenty of hiring going on. New job postings have not plunged the way they did in the past. In previous recessions, including after the Crisis, a lot of unemployment had to do with a combination of attrition and a lack of hiring-much more so than outright layoffs. However, that does not appear to be happening now as job postings are still holding strong at their 2015 levels.
FINSUM: This is an encouraging sign for the economy and for individual job seekers. There is still a chance that demand hollows out—especially if we have another full scale lockdown—but for now things look positive.
Friday saw the release of what appeared to be absolutely stellar jobs numbers. Instead of the jobless rate potentially hitting almost 20%—which was the forecast—the opposite happened: the unemployment rate fell to 13.3% in May from over 14% in April. Markets soared. However, the reality is that those numbers are both highly inflated, and unrealistic. Firstly, the Bureau of Labor Statistics counted those who are currently furloughed and unpaid as “employed”. It admitted that if it hadn’t done so the unemployment rate would have jumped to over 16%. Secondly, the big jump in hiring was at least partly, and probably hugely, because of an artificial government rule in the PPP program. Small businesses had to hire employees back by the end of June to have their loans turn into grants, so there were artificial incentives to put people back on payroll even I the absence of true business demand.
FINSUM: If you take these two facts together, it becomes clear that the May data is not really a reflection of an economic pickup, so don’t make any predictions based on this.
The job losses keep coming week over week. Thursday morning has become a repetitive and gloomy event as millions of job losses hit the tape when weekly jobless claims are released. This morning the figure was 3.3m. That number means the total figure is now over 30m jobs lost in the last six weeks. The fastest drop in history by a gigantic margin. What is even more troubling is that the data underrepresents the true figure, as call centers have been unable to cope with the demand and thus have been underreporting true figures.
FINSUM: The job loss figures are absolutely staggering. California is paying $1bn in jobless insurance per day. We think the market is underestimating how deep of a recession this hit to consumer spending might represent.
Most of this summer was dominated by the dual fears of a trade war and a recession. A weakening of underlying economic data backed up the view that we may be headed for a recession, and the long yield curve inversion only heightened those fears. However, new economic data is providing a pretty strong rebuttal to those ideas. The last four economic releases, including home sales, jobless claims and beyond, have all come back more strongly than forecast.
FINSUM: The economy never looked that bad, as it was mostly the yield curve and trade war that pushed fears of a downturn. Accordingly, we don’t think these recent data releases will have much of an effect one way or the other.