The economic statistics are rolling out to show the initial impact of the shutdown of the economy.
The collateral effect the shutdown and isolation will have on deteriorating emotional and mental health along with increased mortality due to postponed or canceled medical treatment will take years to quantify.
New stats in last few days:
- 3.8 million new unemployment claims this week
- New unemployment claims in six weeks are now equal to 18% of the people who were working in February
- CBO expects unemployment rate to average 11% for 2020
- 4.8% annualized drop in GDP for first quarter
New claims for unemployment
4/30/20 – Department of Labor – Unemployment insurance weekly claims – Another 3,839,000 people filed an initial claim for unemployment in the week ending April 25.
That is six weeks in a row of horrible stats.
4/30/20 – Wall Street Journal – Over 3.8 Million American Filed For Jobless Benefits Last Week as States Struggle With Coronavirus Claims Surge – The tallies of recent weeks are under-counts because the antiquated state unemployment systems can’t handle the surge. Analysis by two economists estimates there are around 600,000 people who were trying to apply during the week ended 4/23 but could not get their applications into their state system.
Summary of new claims
Here is my summary of the info. Table accumulates the number of new claims by week with a subtotal. The number of people who are unemployed in March is then listed with a total of my estimate of the unemployment situation now.
Tally is actually worse because the people who don’t qualify for unemployment or people who can’t get processed through the creaky state systems are not included. Final line is civilian labor force at the end of February according to the U.S. Bureau of Labor Statistics.
The second column calculates the number of unemployed as a percentage of the February civilian labor force. (My previous calc incorrectly said this was March.) This is not how the unemployment rate is calculated, but it does give a hint at how bad the economy is and how fast it is deteriorating.
My wild guess is the U-3 unemployment rate, if an instantaneous calculation could be made, is above 20% and rising. That number is probably higher because of people who cannot be processed through the state systems. The actual rate will probably be far lower because the U-3 unemployment rate (and the U-6 as well) excludes people who have given up looking for work. Who would possibly expect to find a new job in this environment?
|unemployed||% of Feb.|
|4/4/2020 – released 4/9/20||6.62||4.0%|
|4/11/20 – released 4/16/20||5.24||3.2%|
|4/18, released 4/23||4.44||2.7%|
|unemployed in February||5.70||3.5%|
|3/20 civilian labor force||164.54|
Guess on unemployment rate by CBO
4/24/20 – US News – CBO: Coronavirus Will Keep Unemployment North of 10% – Estimate from the Congressional Budget Office estimates following unemployment rates:
- 14% – second quarter 2020
- 16% – third quarter 2020
- 11.4% – average for 2020
- 9.5% – end of 2021
My thought is those numbers are going to severely understate the actual unemployment condition. Keep an eye on the U-6 and the civilian labor force participation rate. In the very near term, so the next couple of months, they’re going to be an incredible number of discouraged workers, many people who don’t even bother looking for work because is nothing there. Folks in that condition won’t count in either the headline U-3 rate or even the discouraged-worker U-6 rate.
GDP drops in 1st quarter
4/29/20 – Wall Street Journal – US Economy Shrank at 4.8% Pace in First Quarter – The gross domestic product shrank at a 4.8% annualized rate in the first three months of the year. Keep in mind the collapse started in the last three weeks of March so there’s not even one full month of the economy wide shut down that is reflected in the stats.
The not-so-bold estimate from many economists is we are already in a recession. That is a fairly easy estimate to make.