The unemployment figures that we are seeing are startling. We have now seen 30.3 million people file for unemployment insurance in the last six weeks. These numbers are historic even when comparing to the Great Depression. The notion that we will have a sharp V-shape recovery is simply not going to be the case. While shutting things down can happen quickly, starting them back up is not going to be the case. For one, you now have people that are worried about getting a virus that is still circulating around the country at high levels. In many places, the curve has only flattened because people have used social distancing. But the numbers will likely go right back up once the economy opens up, if we go back to the old normal. It is evident that we did not have a robust enough system to deal with a pandemic like this.
30.3 million Americans file for unemployment insurance
The unemployment figures are historic. We’ve essentially shut down our economy and this is what we find on the employment side of the equation:
Major points: All the gains since the Great Recession are now gone and some. This kind of unemployment surge did not happen during the Great Depression. We are truly in uncharted territory here.
A vast majority of the job losses have come from the sectors that employ the most people:
These were simply the first sectors that got hit. But the next wave is going to hit white collar workers that depend on this consumption base to purchase things. At a certain point, all of the $2 trillion stimulus is going to be gone. Then what? Are we going to send out more and more stimulus? As I mentioned in the last article, the $2 trillion given out was poorly done. At this price tag, you should have sent out $15,000 to each American household and guess what? It would have cost the same with a bigger direct impact. Instead, some households got $1,200.
We’ve definitely now shifted away from our “rally around the flag” moment and now people want to move forward in some way. You are seeing some states reopen while others are still working through the process. Given that we have 50 states and some are more aggressive in their approach, we are going to see how “taking it for the team” is going to play out. Unfortunately the virus is still raging in the Northeast of the country and seems to be very high in other parts as well.
What is coming up? Next week the unemployment insurance figures are going to be daunting once again. We will get our first glimpse of the unemployment rate but realistically this is not going to highlight the real damage that is happening in the way it is calculated. The reality is, the economy can only endure so much but this is also exposing that Wall Street is really detached from what is happening on Main Street USA.
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