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If You Thought Last Week's Jobless Claims Were Bad...

Mark Vickery

Thursday, April 2, 2020

Last week brought forth an unprecedented number of Initial Jobless Claims in the U.S. for a one-week period: 3.28 million. This was up drastically from the historically low 220K-225K range we’d been enjoying the past several years. But if you thought that 3.28 million figure gave you sticker shock, hang onto your face mask…

Today we see 6.648 million new jobless claims, more than doubling last week’s all-time high, which was itself revised upward another 24K claims to 3.307 million. Expectations for this week were for roughly 3.5 million to 5.5 million; today’s new number easily surpasses these.

Continuing Claims, from a week in arrears, rose from 1.8 million (consistent with our previously robust employment situation) to 3.029 million. These numbers will be ratcheted up significantly in the weeks to come.

Before we downward spiral into despair over this, however, consider a moment the strength of our jobless claims processing system. These are state-run organizations, so results may vary depending on where one lives, but the mere actuality of processing double the number of record claims in a week’s time is truly extraordinary.

Also, we might look at this as a measure of expediency in the workforce: utterly slashing payrolls and contracts country-wide may be a way of de-cluttering the landscape in order to grow some green-shoots in employment sooner. In addition, as the $2.2 trillion relief package passed by Congress last week may hopefully backstop the hemorrhaging of employees in the near-to-medium term, meaning perhaps we are seeing the worst of this labor force calamity up front.

It’s cold comfort to those on the front lines of the newly unemployed, of course. But as this is all a condition of proactive measures to keep the COVID-19 coronavirus pandemic from claiming millions of lives in this country, ultimately a temporary economic set-back is a fair trade. President Trump has often said our current situation is akin to fighting a war; indeed, we’re passing through a crucible in real time reminiscent of the sacrifices made in World War II, which most of us on the planet have not experienced.

So we’ll continue digesting this bad news. Think of it as taking our medicine. On the other end of this major historic episode will be a new, keener understanding of myriad realities — and hopefully plenty of new opportunities to go with them.

In anyone is interested in ancient history, the U.S. Trade Deficit figures for February were released this morning, as well. The headline number came in exactly according to consensus estimates, -$39.9 billion, from a downwardly revised -$45.5 billion in January. Exports fell $0.8 billion month over month to $207.5 billion, while Imports fell $6.3 billion month over month to $247.5 billion. All of this is reflective of the improving trade situation after a year-plus trade war with China brought us a Phase One agreement.

Tomorrow’s non-farm payroll numbers from the U.S. Bureau of Labor Statistics (BLS) will not be pretty, either. However, because the sample week was from the week before the bottom fell out of the economy last month, the numbers may not come close to reflecting our current dystopian jobless claims until next month’s report. Consensus currently is for -140K new jobs for March, with an Unemployment Rate rising 20 basis points to 3.7%. These numbers, to say the least, do not come close to telling the whole story.

Mark Vickery
Senior Editor

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