Unemployment Claims Spike to 3.28 Million, New Record High

Mish

Initial unemployment claims spiked to 3,283,000. That's nearly 5 times the previous high.

Employers added jobs for a record 113 months through February but that streak will end with a bang in the March as a Record 3.28 Million File for U.S. Jobless Benefits.

“We haven’t seen this big of a free fall before,” said Keith Hall, former director of the Congressional Budget Office and adviser to President George W. Bush. “Not even during the Depression…It’s really like an instant Great Recession.”

Northern Trust Chief Economist Carl Tannenbaum said if half the workers in hard-hit industries, such as restaurants, retail and personal services, are laid off the unemployment rate could rise 10 percentage points, to more than 13%. That is well above the post World War II record high of 10.8% at the end of the 1981-82 recession.

Retail Grinds to a Halt as 47,000 Stores Close

Yesterday I reported Retail Grinds to a Halt as 47,000 Stores Close

Walmart and Amazon are hiring, but must most industries are hit hard.

Dental assistants, massage workers, physical therapists, house cleaners, airlines and hotel industries are decimated.

US Output Drops at Fastest Rate in a Decade

Markit reports US Output Drops at Fastest Rate in a Decade

Europe is in worse shape with the Largest Collapse in Eurozone Business Activity Ever

Nothing is Working Now: What's Next for America?

For a 20-point discussion of how things are likely to unfold, please see Nothing is Working Now: What's Next for America?

Mike "Mish" Shedlock

Comments (78)
No. 1-25
Tony Bennett
Tony Bennett

Blew past consensus:

"A staggering total of 1,000,000 initial jobless claims is Econoday's consensus forecast for the March 21 week, a week that suffered wide shutdowns in recreation, food services and manufacturing. The high estimate for the week goes up to 2.737 million. Initial claims in the March 14 week were up 81,000 to 281,000."

Casual_Observer
Casual_Observer

What U-3 rate does that translate to ?

Tony Bennett
Tony Bennett

"It’s really like an instant Great Recession.”

And yet many (on tv) are saying economy will "light switch" back to normal once virus passes. Good luck with that.

tokidoki
tokidoki

Don't worry. Stock market up big 3 days in a row.

PecuniaNonOlet
PecuniaNonOlet

The numbers are probably much worse. I know a few people who couldnt log on to the system and I have read stories across the country that the unemployment system was overwhelmed and crashing. Some of this will show up next week of course. I am bewildered why the market is rallying, most of the world is in lockdown, the is near zero economic activity and Dow up 5% - Wtf?

abend237-04
abend237-04

This is only a down payment for what's coming if we don't move quickly to get a restart plan in place, one with TDS-proof, objective criteria.

Zero new cases and deaths is a Depression ll plan.

If we fail in that, those awaiting unanimity among politicians and medical "experts" as to when to restart, will be sitting stunned in August as unemployment rockets past 30 million.
This is a genuine emergency, unlike the AGW boondoggle, there will be immediately devastating results obvious to all, and guaranteed, in months of lockdown delay.

The numbers don't lie; Even worse, they don't care whether we like The Donald or not.
It's either isolate elderly, drive antivirals, antibodies and vaccine(s) with maximum possible, reasonable distancing and caution, or Depression ll for the miserable survivors.
There will absolutely NOT be unanimity among our "leaders" before Christmas.

RonJ
RonJ

“We haven’t seen this big of a free fall before,” said Keith Hall, former director of the Congressional Budget Office and adviser to President George W. Bush. “Not even during the Depression…It’s really like an instant Great Recession.”

More like an instant Great Depression.

Runner Dan
Runner Dan

In happier news, the Cheesecake Factory is telling their landlords to shove it in April. Really, everyone in a similar position could do the same. When not paying rent catches on, watch how quickly a new stimulus package aimed at "helping" entities meet their mortgage/leasing obligations gets passed. True bank bailing by inflating the currency.

TCW
TCW

Can anyone explain what triggers the loss in confidence of a currency or central bank? How large can it's balance sheet go in relative terms before SHTF, is there any history that shows how it happens? I've considered buying gold but I figure it's going to be outlawed again. Maybe I should quit worrying and start drinking...

Herkie
Herkie

This number is going to be heavily revised next Thursday Mish, much higher and will keep going up. In fact the 3.28 million people filing have overwhelmed the systems at state level, UI will be granted to many retroactively because of that.

The long-term is harder to guess at, if this goes on for another month till the end of April I am thinking some businesses on the margin just will not come back from it. If we are still basically where we are or worse by one month from now we will see more stimulus, more debt.

As to the deflation/inflation (HYPER???? Anyone?) debate, and there is one in spite of your certainty Mish, it is too early to tell. But, I am thinking that a lot of debt will go bad and just get wiped off the books.

I was watching a Youtube tyhe other day because Peter Schiff was being interviewed, we all know how is widely dismissed as being right the same way a broken clock is, but I thought I would watch anyway, and he made the point that money only has value as it relates to what it can buy in the way of goods and services. If production of those goods and services goes down while money supply rises (and god knows between the Fed and unlimited QE as well as Fed bailouts, and the federal government and trillions more in bailouts money supply is rising at a pace unimaginable even a few months ago) the result can only be inflation. It cannot be deflation. Yes, the price of some things will fall temporarily as demand falls because of the present emergency, but when that is past us what will be left is far lower production and far more money in the economy, prices will rise just as unimaginably as the current pumping and then some because once you start hyperinflation the only cure is more hyperinflation.

Weimar did manage to stop hyperinflation of it's papiermarks but only by deleting that currency and going to the rentenmark in which every denomination was backed by German assets including everything in Germany, agricultural land, industry, factories, everything. And even then the economy crashed, though that crash did make it possible to start to rebuild, but the damage was done and the cure was Adolf Hitler. He put people back to work but not in a constructive way, he did it by getting them prepared for WWII, even the autobahns were meant to facilitate troop and materiel movement.

"After the Occupation of the Ruhr in early 1923 by French and Belgian troops, referred to as the Ruhrkampf, the German government of Wilhelm Cuno reacted by announcing a policy of passive resistance. This caused the regional economy of the Ruhr, the industrial heartland of Germany, almost to stop. The occupation authorities reacted with arrests and deportations to strikes and sabotage. Those displaced and left without income by the Ruhrkampf and their families fell back on public income support. Tax revenues plunged as economic activity slowed. The government covered its need for funds mainly by printing money. As a result, inflation spiked and the Papiermark went into freefall on the currency market. Foreign currency reserves at the Reichsbank dwindled.[2]" Wiki

Sound familiar? Economy has an overnight heart attack with millions unemployed, fall back for support on public treasury printing presses, tax revenues plunge, production goes out the window, and inflation results.

We actually went through something similar after Nixon closed the gold window, not as severe, but I well remember the years of inflation, especially during the Ford and Carter administrations and the total lack of effective response till Volker raised the prime lending rate to over 19% multiple times. The oil embargo did to our economy what happened to the German economy in the occupation of the Ruhr. Not to that extreme a degree, but the slowdown was severe. I remember the 12% plus inflation because I was already grossly underpaid in the new all volunteer military and while inflation was double digits year in and year out we got 1-2% raises, that was before the COLA laws were passed. In a few short years we were making about half as much in spending power as we had in 1976. And it was Volker raising interest rates to 19% that gave us the recession of 81/82 that was the previous record for unemployment claims. He stompped hard on the economy and that did put the inflation fire out so it did not morp any further into hyperinflation.

We can't (or should I say will not) do that now because sudden interest rates over say 15-19% would nuke the debt markets in a way it did not then, if there was a mountain of debt then there is an etire galaxy of debt now. It would probably result in at least a billion deaths worldwide as economies around the world simply stop. We would see canibalism. That is how bad it will get. Then again something like that does seem inevitable since just continuing to add zeros to the books will eventually do that as well. We can't just keep inventing new names for larger numbers, like a petatrillion dollar minimum wage. The time has to come when economics and finance are just irrelevent. Survival becomes the only thing for enough people to bring it asll down.

By the way, did you see that in spite of the Fed support for all markets S&P cut Ford Motors to junk today? I expect that Ford is not the only one though, GE, GM, and other larger players in the commercial paper market are also going to get slashed. Borg Warner I think I would get some put options on. But that is just me and NOT FINANCIAL ADVICE!

Herkie
Herkie

Edit function not working again Mish. People will just have to mentally edit my posts as they read.

njbr
njbr

Back to work?

We're just in the 2nd inning of the game and people are leaving for their cars in the lot, confident of the result.

From the propaganda channel, DNR (do not resuscitate) decisions for CV sufferes...

bradw2k
bradw2k

I hear Patagonia will have no layoffs, and will be paying full wages to August, even to cashiers who are sitting home on their butts. Because Chouinard is rich and he can and wants to do this.

Jojo
Jojo

Brother can you spare a dime?

Tom Waits

Bing Crosby

Misc
Misc

That's 3.28 million that applied for unemployment pay for the week ending 3/20.

Figure another 3 million for those who don't qualify for unemployment compensation (part timers, illegals, and those without 6 months employment at their last employer).

Figure another 5 million that got their hours cut

Next weeks report will be even worse, but they passed the stimulus bill. Who cares if anyone has a job? We will print our way to prosperity. What could possibly go wrong?

Jojo
Jojo

GoFundMe Confronts Coronavirus Demand
Americans are turning to crowdfunding to cover coronavirus-related costs while the government prepares to deliver on its stimulus plan. But most campaigns aren’t meeting their goals.
March 26, 2020, 11:07 a.m. ET

bradw2k
bradw2k

A real leader would give a target back-to-work date based on input from:

  • good epidemiologists
  • good economists

There are difficulties with this. For one, there are no good economists (full stop?) who actually look at reality and could say what the actual trade-off will be in terms of lost productivity, money flows, and the wider effects -- all the way to: how many people are going to have major medical issues or will die for OTHER reasons if the economy is on ice for 2 months? Granted that may be incalculable ... but is anyone making a good effort?

Trump's Easter deadline for the virus (!) is arbitrary demagoguery. It does no one any good, and I don't see how it won't blow up in his face when, come Easter, the hospital situation is a top-headline disaster.

thimk
thimk

how can 3 million people enter an unemployment claim form on a smart phone ? don't you need a laptop? many states will only accept on-line entry. And public laptops/desktops are available in libraries , but they are closed. Oh and in Florida you have to agree to look for work at 5 sources and document search every 2 weeks.

AWC
AWC

Relax, Munchkin says these unemployment numbers are irrelevant.

Look, if we haven’t figured out by now that the big shots have lost control, well, just leave your trust (money?) in their hands and watch what happens. Oh, and Jerome stated the Fed is not out of ammo. Just need some more decimal points behind those bazooka blasts,,,,,like, maybe $20 trillion? Or why not $200 trillion?

Greggg
Greggg

I am waiting for health insurance companies to report their quarterly stats. I wonder how they are going to pay those claims.

Six000mileyear
Six000mileyear

With so many Labor Department computers crashing, those who could not file this week will add to those next week. Other states will support this historical level as they issue "stay at home" orders for the first time. The unemployment surge will end when Dept of Labor websites can handle weekly claims without crashing.

Sleemo
Sleemo

I am awaiting Lawrence Yun's NAR housing market report with a fresh hot batch of popcorn.

Greenmountain
Greenmountain

Yes applied but not yet getting benefits because applying is Step 1, Step 2 is verification and guess what there is no one to do the verification and phone lines jammed - so yes apps up, benefits on hold because the system is jammed.

dingbat
dingbat

3.2 million? Pfft Child's play. 1,000,000 people applied for employment insurance in Canada this week, on top of 500,000 last week. We have 1/10 the population of the United States. We are so screwed.


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