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Blain’s Morning Porridge – Aug 11 2020 – Who Pulled the Plug?

Blain’s Morning Porridge – Aug 11 2020 – Who Pulled the Plug?

“Unnervingly coherent and laughably mindless”

This morning’s opening quote isn’t an independent assessment of the Morning Porridge – but is lifted from a newspaper article on Artificial Intelligence.  It ends on a very scary tag: the AI is asked if it is conscious and responds: “To be clear, I am not a person.  I am not self-aware.  I am not conscious.  I can’t feel pain.  I don’t enjoy anything.  I am a cold, calculating machine designed to simulate human response and to predict the probability of certain outcomes.  The only reason I am responding is to defend my honour.”  This is not from some dystopian novel or a reboot of the Terminator series… but from the this morning’s FT

Should we pull the plug or ask it some more questions? 

Back in the real world…

We are now in the depths of the summer doldrums – and markets are showing even less correlation to global events than usual.  Stock and Bond Markets remain chronically distorted by the effects of Central Bank liquidity. China markets have shrugged off the new Trump US sanctions – and Xi has stepped up the arrest of protest figureheads in HK.  Ten-cent has taken a tumble on the back of Trump banning Tik Tok and WeChat – confirming the degree to which individual stocks are vulnerable to shifts in the narrative. Watch for case-by-case wobbles as the China-US rift opens wider – when will China decide to make trouble for Tesla to boost its copy-cars? 

But even the China/US tiff is likely to be something of a sideshow. My first question to the AI machine would be – just how deep is the coming global recession going to be?  Despite some recent strong economic releases, the trend shows the recession is underway.

…click on the above link to read the rest of the article…

Media Continues to Misreport Unemployment: 31.8 Million People on State & Federal Unemployment Insurance. Week 18 of U.S. Labor Market Collapse

Media Continues to Misreport Unemployment: 31.8 Million People on State & Federal Unemployment Insurance. Week 18 of U.S. Labor Market Collapse

I get tired of reporters or bots who don’t read beyond the 2nd paragraph of Labor Department press releases. 2.35 million initial state and federal unemployment claims. PUA claims (gig workers) now 41% of total unemployment. 20% of labor force on unemployment insurance.

It just doesn’t let up. An astounding number of newly laid-off workers keeps filing for unemployment benefits week after week and pile on top of the people already unemployed. And the number of people who started working again isn’t big enough to make a visible dent in the curve.

In the week ended July 18, the total number of people who continued to claim unemployment compensation  under all state and federal unemployment insurance programs, including gig workers and contract workers, edged down to 31.8 million (not seasonally adjusted), as reported by the Department of Labor this morning. It was the third highest level ever and just a tad off the peak:

Unabated lazy misreporting in the media.

If you read this morning or heard on the radio that 16.2 million people were claiming unemployment insurance – the “continued claims” – and you thought that there were only 16.2 million people who claimed unemployment benefits, you fell victim to lazy misreporting in the media, by reporters or bots that didn’t read the Labor Department’s press release beyond the second paragraph.

Those 16.2 million were only the claims under state programs, and do not include the claims under federal programs. All combined, there were 31.8 million people on the unemployment rolls. That’s what the Labor Department reported further down in the press release.

There is a huge difference between 16.2 million and 31.8 million unemployed people!

…click on the above link to read the rest of the article…

Never Before Have I Seen So Much Fake Unemployment & Jobs Data by the Bureau of Labor Statistics. Labor Department Nails It

Never Before Have I Seen So Much Fake Unemployment & Jobs Data by the Bureau of Labor Statistics. Labor Department Nails It

Labor Department today: People on state & federal unemployment insurance jumped to 31.5 million, worst ever.

Bureau of Labor Statistics today: 4.8 million jobs created, unemployment dropped by 3.2 million.

BLS under-reported unemployment by 13.7 million, based on data from the Labor Department. What’s happening is infuriating. Read and cringe.

Normally, the jobs report by the Bureau of Labor Statistics is released on the first Friday of the month. And the unemployment claims report is released Thursday every week. But this month, the monthly jobs report was also released today because of the 4th of July weekend. And now we have this delicious situation of both reports on the same day, with the Labor Department’s unemployment insurance data – people who are actually receiving unemployment benefits under state and federal programs – calling the Bureau of Labor Statistics’ survey-based report a liar. And we’ll go through them.

What the Labor Department reported today:

The total number of people who continued to receive unemployment compensation in the week ended June 27 under all state and federal unemployment insurance programs, including gig workers, surged by 937,810 people in the week, to 31.49 million (not seasonally adjusted), the highest and worst and most gut-wrenching ever:

The number of people receiving state unemployment insurance (blue columns in the chart above) has essentially been flat for three weeks (it ticked up this week), as many people got their jobs back while many other people were newly laid off. But the number of people on federal unemployment programs, including gig workers (red columns), has been soaring.

What the Bureau of Labor Statistics reported today:

…click on the above link to read the rest of the article…

A Summer of Protest, Unemployment & Presidential Politics – Welcome to 1932

A Summer of Protest, Unemployment & Presidential Politics – Welcome to 1932

In 1932, as in 2020, the nation experienced an explosion of civil unrest on the eve of a presidential election, writes James N. Gregory.

The Bonus Army stages a demonstration at the empty Capitol on July 2, 1932.
(Underwood and Underwood, photographers; Library of Congress)

An election looms. An unpopular president wrestles with historic unemployment rates. Demonstrations erupt in hundreds of locations. The president deploys Army units to suppress peaceful protests in the nation’s capital. And most of all he worries about an affable Democratic candidate who is running against him without saying much about a platform or plans.

Welcome to 1932.

I am a historian and director of the Mapping American Social Movements Project, which explores the history of social movements and their interaction with American electoral politics.

The parallels between the summer of 1932 and what is happening in the U.S. currently are striking. While the pandemic and much else is different, the political dynamics are similar enough that they are useful for anyone trying to understand where the U.S. is and where it is going.

Tanks and mounted troops advance to break up a Bonus Marchers’ camp of veterans protesting lost wages, Washington, D.C., July 28, 1932. (PhotoQuest/Getty Images)

Multiracial Street Protest Movement

In 1932, as in 2020, the nation experienced an explosion of civil unrest on the eve of a presidential election.

The Great Depression had deepened through three years by 1932. With 24% of the work force unemployed and the federal government refusing to provide funds to support the jobless and homeless as local governments ran out of money, men and women across the country joined demonstrations demanding relief.

Our mapping project has recorded 389 hunger marches, eviction fights and other protests in 138 cities during 1932.

Although less than the thousands of Black Lives Matter protests, there are similarities.

…click on the above link to read the rest of the article…

“V-Shaped” Recovery Not Now: It Gets Worse, 30.55 Million on Unemployment. Week 14 of U.S. Labor Market Collapse

“V-Shaped” Recovery Not Now: It Gets Worse, 30.55 Million on Unemployment. Week 14 of U.S. Labor Market Collapse

Had a setback. Over 11 million gig workers on unemployment insurance. But four states, including Florida, still can’t process federal PUA claims.

This unemployment crisis is shape-shifting, and some states are still trying to catch up with the torrent of unemployment claims, and some states still haven’t figured out how to process unemployment claims under federal programs, including Florida. And so, after three weeks of improving, the data tracking the unemployment crisis got worse.

The total number of people who continued to receive unemployment compensation in the week ended June 20 under all state and federal unemployment insurance programs combined, including gig workers, rose to 30.55 million people (not seasonally adjusted), according to Labor Department data this morning. This is up by 1.3 million people from the prior week (29.26 million), and the second-highest ever, just below the record during the week ended May 23. V-shaped recovery not now:

Even while workers in restaurants, bars, retail stores, hotels, hair salons, etc. are getting called back to work, it’s corporate jobs that are getting axed now. Layoffs at small companies happen quietly, and we rarely see them in the news. But layoffs at big companies make the news, such as Macy’s announcement today that it will lay off 3,900 staff in corporate and management areas, even as it’s bringing back store employees. This is one of the ways in which the unemployment crisis is shape-shifting.

Torrent of new state unemployment claims continues.

Not seasonally adjusted, 1.457 million initial claims under state programs were processed in the week ended June 20, up from 1.433 million initial claims a week ago. These are newly laid-off people who filed their initial unemployment claims that week. While a fraction of the 6-million range in late March, it is still more than twice the magnitude of the spikes during the prior unemployment crises in 1982 and 2009.

…click on the above link to read the rest of the article…

Fourth Turning Accelerating Towards Climax

FOURTH TURNING ACCELERATING TOWARDS CLIMAX

“At some point, America’s short-term Crisis psychology will catch up to the long-term post-Unraveling fundamentals. This might result in a Great Devaluation, a severe drop in the market price of most financial and real assets. This devaluation could be a short but horrific panic, a free-falling price in a market with no buyers. Or it could be a series of downward ratchets linked to political events that sequentially knock the supports out from under the residual popular trust in the system. As assets devalue, trust will further disintegrate, which will cause assets to devalue further, and so on. Every slide in asset prices, employment, and production will give every generation cause to grow more alarmed.” – Strauss & Howe – The Fourth Turning

Economists Predict Great Depression II for US Economy: Fast or V ...

I’ve been writing articles about the Fourth Turning for over a decade and nothing has happened since its tumultuous onset in 2008, with the global financial collapse, created by the Federal Reserve and their Wall Street co-conspirator owners, that has not followed along the path described by Strauss and Howe in their 1997 book – The Fourth Turning.

Like molten lava bursting forth from a long dormant (80 years) volcano, the core elements of this Fourth Turning continue to flow along channels of distress, long ago built by bad decisions, corrupt politicians and the greed of bankers. The molten ingredients of this Crisis have been the central drivers since 2008 and this second major eruption is flowing along the same route. The core elements are debt, civic decay, and global disorder, just as Strauss & Howe anticipated over two decades ago.

…click on the above link to read the rest of the article…

Rabobank: Stocks Go Up As Everything Is Going Down In Flames

Rabobank: Stocks Go Up As Everything Is Going Down In Flames

It’s All Going to the Dogs (and Goats)

Friday’s April US payrolls report showed 20.5 million jobs lost when in an ordinary downturn 200,000 might be considered bad; the drop in March alone was larger than that seen during the worst of the global financial crisis. In short, we face a global future of mass unemployment (now 14.7% in the US and 13% in Canada) on top of mass debt, both public and private.

Last week the German Constitutional Court (GCC) ruled that it is superior to the European Court of Justice (ECJ), and that the ECB has three months to prove it is not exceeding its remit with its extraordinary monetary policy. Yesterday the President of the EU Commission von der Leyen threatened to sue Germany, stating the final word on EU law is always spoken by the ECJ. Guess which court ultimately hears the case? The ECJ. How is this going to play out if the GCC doesn’t back down? Very badly in the Eurozone periphery, to the benefit of Euroskeptics. How is it going to play out in Germany if the GCC is forced to back down? Badly in Germany, to the benefit of Euroskeptics. Given the ECJ won’t back down and the ECB has said it will ignore the GCC, and the GCC is not likely to blink either, we seem set for an institutional crisis over the scope and shape of the Eurozone financial market – albeit one that rumbles on rather than erupting immediately.

US Vice-President Mike Pence, titular head of the US virus task force, is self-isolating after figures close to the White House were diagnosed as positive for Covid.

…click on the above link to read the rest of the article…

GDP Now Q2 Estimate At -34.90 Percent, So What Now?

GDP Now Q2 Estimate At -34.90 Percent, So What Now?

Summary

  • The Atlanta Fed’s GDP Now is estimating a -34.9 percent Q2 GDP print, which is 3.5x the largest quarterly decline in the post-WWII economy
  • If realized, the 11.3 percent non annualized first-half GDP collapse in 2020 will approach the worse year of the Great Depression, when in 1932, the economy shrank 13.1 percent for the entire year  
  • We are not paying much attention to these numbers as they reflect an economy that has been closed for two months, which should experience a relatively sharp snapback in Q3, with unemployment most likely peaking this month
  • Nonetheless, the pandemic and economic lockdown will do long-term structural damage to the economy
  • The rapid growth of the monetary aggregates alleviates much of the deflationary forces in the economy in the short-term and we perceive inflation a much bigger risk over the medium-term
  • If the GDP Now estimate holds, and even if GDP prints a record annualized 27.6 percent number in Q3, real output will still be 7 percent below the Q4 2019 level with unemployment remaining close to low double digits
  • We suspect the recovery will come too late and not be enough to save President Trump and the Republicans though the White House will tout it as “the greatest economic recovery in the history of the world“
  • Investors and companies should plan for higher capital gains and corporate taxes
  • Check out the astonishing performance of our stock picker’s large-cap portfolio, which is trouncing the S&P500 this year

Since the COVID crisis hit America, many businesses are operating at limited capacity while others have ceased operations completely.  The unprecedented aggregate supply and demand shock to the U.S. economy has resulted in horrific economic data, including the 20.5 in nonfarm payroll jobs lost in April and the unemployment rates shooting up over 14 percent.

…click on the above link to read the rest of the article…

U.S. Depression? The V-Shaped Recovery Fades Away

U.S. Depression? The V-Shaped Recovery Fades Away

The recent jobless claims figures show how difficult it will be for the U.S. recovery to be as quick and strong as initially expected.

  • 7.7 million jobs were lost in Hospitality and Leisure in April, 2.5 million in Education and Health, with 2 million in Retail and another 2 million in Professional Services. These sectors are unlikely to recover fast and enough to compensate the job losses of the past month and even less likely to see the same level of wages of 2019.
  • Credit card delinquencies are rising, and retail sales are going to see a very modest recovery because household debt is increasing, wages are under pressure and most citizens are changing their consumption patterns, looking to strengthen their savings in case another shock arrives.
  • Corporate debt is rising to new records due to the collapse in operating revenues. As such, companies will likely take all possible measures to conserve cash flow, reduce expenditure and be prudent about hiring decisions. This will lead to slower job creation and investment even once the economy opens.
  • Tax increases are likely to affect the recovery. The government deficit is soaring, with the Treasury looking at $2 trillion of new debt in 2020 due to the measures implemented to combat the economic impact of coronavirus. Unfortunately, the Democrats are looking to increase taxes just when the economy needs more investment and attraction of capital. If taxes rise significantly, what is already a weak outlook for capital expenditure and job creation is likely to worsen.

All of this makes a V-shaped recovery even more challenging than before. However, the U.S. economy is likely to recover faster than the Eurozone and suffer less in 2020.

…click on the above link to read the rest of the article…

As Unemployment Claims Rise, So Do Missed Mortgage Payments

As Unemployment Claims Rise, So Do Missed Mortgage Payments

Over 22 million people have filed for unemployment benefits in the past 4 weeks. Many struggle with payments.

Black Knight reports More than 2.9 Million in Forbearance, 5.5% of All Mortgages

Key Details 

  • As of April 16, more than 2.9 million homeowners – or 5.5% of all mortgages – have entered into COVID-19 mortgage forbearance plans
  • This population represents $651 billion in unpaid principal and includes 4.9% of all GSE-backed loans and 7.6% of FHA/VA loans
  • At today’s level, mortgage servicers would be bound to advance $2.3 billion of principal and interest payments per month to holders of government-backed mortgage securities on COVID-19-related forbearances
  • Another $1.1 billion per month in lost funds will be faced by those with portfolio-held or privately securitized mortgages

Forbearance Totals

Black Knight Forbearance Totals 2020-04-16

Payment Forbearance Under Cares Act

On March 27, 2020, President Donald Trump signed the Coronavirus Aid, Relief, and Economic Security Act (also known as the CARES Act) into law. A provision of the CARES Act allows borrowers with federally backed mortgages to request temporary loan forbearance for up to 180 days. Borrowers also have the right to apply for an extension of another 180 days of forbearance

Once a borrower requests hardship forbearance due to the COVID-19 pandemic, the act requires the servicer to offer a CARES Act forbearance. 

Pitfalls 

Forbes warns of Mortgage Forbearance Pitfalls

John Ulzheimer, an Atlanta-based credit expert formerly of FICO and Equifax, warns of a potential balloon payment.

“If the lender or servicer demands that you pay back the deferred amount all at once or in an otherwise expedited manner, that could be impossible for the borrower.” 

Unfortunately, having a mortgage servicer ask for a “balloon” payment once your forbearance period ends is a very real possibility. Borrowers from multiple national banks have reportedly been informed of the need to repay any delayed payments in a lump sum at a future date.

Three Things Not to Do

…click on the above link to read the rest of the article…

“Worst. Recession. Ever.”

“Worst. Recession. Ever.”

When Harry Met Comic-Book-Guy

Worst global downturn since the Great Depression” says the IMF. Actually, it’s potentially worse than that.We are seeing credible (initial) claims in the UK and US that millions/tens of millions are going to be unemployed – again taking us back to black & white memories of long queues of the jobless holding signs saying “Will Work For Food.”

We are also seeing calls for GDP to collapse by up to a third in the presumed Q2 trough in the UK and the US, as just two examples, which in the space of months would already take us to the kind of depths plunged back in the 1930s (and actually this will be the worst recession since the 18th century according to one UK report.) Moreover, in a world far more economically-integrated today than it was in the 1930s, what happens in the (smaller) West will rapidly hit the (larger) rest.

As will the virus itself, of course. What is to stop it rampaging through Africa and South Asia, as just two examples? “Heat!” we have been told. Yet besides the fact that Covid-19 is transmitting in Indonesia and Singapore we see a report today that French scientists have found some strains of the virus can survive long exposures to temperatures of up to 60c, and it takes almost boiling point to kill it. Another (non-peer reviewed) study from Australian and Taiwanese researchers based on samples from India has shown Covid-19 is already mutating, shifting its mechanism used to bind to human cells – the paper concludes “This means current vaccine development…is at great risk of becoming futile.” Moreover, a Chinese scientist is warning of a serious risk of a second global wave of Covid in November – exactly the pattern seen in the 1918-19 Spanish Flu.

…click on the above link to read the rest of the article…

Deep Economic Suffering Has Erupted All Over America, But Guess Who The Federal Reserve Is Helping?

Deep Economic Suffering Has Erupted All Over America, But Guess Who The Federal Reserve Is Helping?

As millions upon millions of Americans lose their jobs in the greatest wave of unemployment in U.S. history, the Federal Reserve has decided that now is the time to spend trillions of newly created dollars in a desperate attempt to protect financial asset values.  In other words, as much of the country suddenly plunges into poverty, the Federal Reserve is working exceedingly hard to protect the wealth of the elite.  Approximately fifty percent of all stock market wealth is owned by the wealthiest one percent of all Americans, and the amount of stock market wealth owned by the poorest 50 percent of all Americans is so small that it really doesn’t matter.  And those running the Fed certainly understand that their reckless policies will create very painful inflation that will hit average American families extremely hard, but they don’t seem to care.  At this point, they figure that asset values must be protected at all costs, and that is going to continue to expand the absolutely massive gap between the rich and the poor in this country.

Over the past 3 weeks, more than 16 million Americans have filed new claims for unemployment benefits.

Prior to this year, the highest number that we had ever seen in any 3 week span in all of American history was about 2 million.

It is a collapse of unprecedented magnitude, and things have already gotten so bad that even “the Happiest Place on Earth” is conducting mass layoffs

Walt Disney World Resort will furlough 43,000 union workers while its theme parks remain closed as authorities restrict large gatherings due to the coronavirus pandemic, according to the Service Trades Council Union.

…click on the above link to read the rest of the article…

America’s New Breadlines Are Growing…

America’s New Breadlines Are Growing…

Over the past month, the American economy has collapsed into a depression, with the most significant unemployment spike in history. Millions of people have just lost their jobs, and as we’ve been documenting, food bank networks across the country are becoming overwhelmed. 

We recently said that some food banks had seen an eightfold increase in the number of people asking for food. The National Guard has been deployed to food banks in Cleveland, Pittsburgh, and Phoenix, to make sure supply chains do not breakdown, which if food shortages did materialize, it could lead to a “social bomb,” triggering civil unrest. 

“I’ve been in this business over 30 years, and nothing compares to what we’re seeing now. Not even when the steel mills closed down did we see increased demand like this,” said Sheila Christopher, director of Hunger-Free Pennsylvania, which represents 18 food banks across 67 counties.

Today’s food bank lines resemble ‘breadlines’ from the 1930s. However, this time around, Americans are not standing around city blocks waiting for soup, they’re sitting in mile-long traffic jams outside donation centers waiting for a care package. 

The run on food banks was first documented on March 30. Drone footage captured a traffic jam of hungry Americans waiting to pick up food aid at a facility in Duquesne, Pennsylvania


Hundreds of cars wait to receive food from the Greater Community Food Bank in Duquesne. Collection begins at noon. @PghFoodBank @PittsburghPG

Embedded video

As a reminder, to visualize how America went from “the greatest economy ever” to “Greater Depression,” in just one month, take a look at the chart below: 

The run on food banks will only increase as the depression worsens in April. 

On Monday, a drone captured dramatic footage outside a South Florida food bank that measured “miles-long” row of cars, reported Daily Mail

…click on the above link to read the rest of the article…

Stockman: This Is Not Your Grandfather’s Recession…

Stockman: This Is Not Your Grandfather’s Recession…

Based on the shocking 6.6 million of new unemployment claims, we’d bet they’ll be some explosive political fireworks soon in this country about Covid-containment versus keeping the main street economy alive. There have now been an unprecedented, off-the charts 9.96 million new unemployment claims in the last two weeks.

For point of reference, it took fully 28 weeks to generate the same level of cumulative new claims after the beginning of the Great Recession. During that interval, the largest weekly number was 387,000 during the week of March 29, 2008.

Even when you scroll forward (not shown) to the worst week after the Lehman Bankruptcy meltdown commenced on September 15, the peak number was only 665,000 during the week of March 28, 2009. So today’s new claims number was 10X higher!

So, yes, some politically incorrect pundit is likely to note that there are now:

  • 47 jobless workers for every confirmed coronavirus case;
  • 320 jobless for every hospitalization; and
  • 2,112 jobless for every coronavirus death.

Moreover, it virtually certain that cumulative initial claims will hit 20 million before the end of April, thereby doubling the above ratios. That is to say, do they really want 100 jobless workers for every case of a bad winter flu?

Well, yes, it seems that our establishment betters can’t get rabid enough urging on a total shutdown of the US economy.

Indeed, the thinly disguised subtext in the whole daily MSM narrative for the last couple of days has been that the benighted governors of the Red States are not doing their part to order their economies into instant cardiac arrest. But it took the perennially obnoxious liberal columnist for the New York Times, David Leonhardt, to come right out and say it.

…click on the above link to read the rest of the article…

Worse Than 2008: We Are Being Warned That The Coronavirus Shutdown “Could Collapse The Mortgage Market”

Worse Than 2008: We Are Being Warned That The Coronavirus Shutdown “Could Collapse The Mortgage Market”

The cascading failures that have been set into motion by this “coronavirus shutdown” are going to make the financial crisis of 2008 look like a Sunday picnic.  As you will see below, it is being estimated that unemployment in the U.S. is already higher than it was at any point during the last recession.  That means that millions of American workers no longer have paychecks coming in and won’t be able to pay their mortgages.  On top of that, the CARES Act actually requires all financial institutions to allow borrowers with government-backed mortgages to defer payments for an extended period of time.  Of course this is a recipe for disaster for mortgage lenders, and industry insiders are warning that we are literally on the verge of a “collapse” of the mortgage market.

Never before in our history have we seen a jump in unemployment like we just witnessed.  If you doubt this, just check out this incredible chart.

Millions upon millions of American workers are now facing a future with virtually no job prospects for the foreseeable future, and former Fed Chair Janet Yellen believes that the unemployment rate in the U.S. is already up to about 13 percent

Former Federal Reserve Chair Janet Yellen told CNBC on Monday the economy is in the throes of an “absolutely shocking” downturn that is not reflected yet in the current data.

If it were, she said, the unemployment rate probably would be as high as 13% while the overall economic contraction would be about 30%.

If Yellen’s estimate is accurate, that means that unemployment in this country is already significantly worse than it was at any point during the last recession.

And young adults are being hit particularly hard during this downturn…

…click on the above link to read the rest of the article…

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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