US Unemployment Update

The past week's unemployment claims came out today, and add another 2.98 million to the pile.  This brings total unemployment claims for the past 8 weeks (two months or so) to 36.5 million.

Determining unemployment percentages depends on what data you use.  The Bureau of Labor Statistics (BLS) shows the employment numbers for the United States in August 2019 as ~157 million (https://www.bls.gov/cps/cpsaat08.htm).  Admittedly, that's not March 2020 statistics, but employment numbers would not change all that much in half of a year.

The St. Louis Federal Reserve has a different set of statistics that show 205.5 million Americans employed in March 2020 (https://fred.stlouisfed.org/series/LFWA64TTUSM647S).  (They show the August 2019 period with employment at 206 million.)

Why the huge difference?  I have no idea.  But going forward, I'll use both to determine unemployment numbers.  Remember that in early March 2020, unemployment was already around 3%.

Using the BLS statistics, we get an unemployment rate of 23.16% for the past 8 weeks.  Add on the previous 3% of people unemployed, and you reach 26.16% unemployment.

Using the St. Louis Fed statistics, we get an unemployment rate of 17.76% for the past 8 weeks.  Add on the previous 3% of people unemployed, and you reach 20.76% unemployment.

The peak rate of unemployment during The Great Depression was 24.9%.  The peak rate of unemployment during the the Great Recession in 2008 was 10%.  

According to BLS statistics, we are already greater than Great Depression unemployment numbers.

According to the St. Louis Fed, we are already more than double Great Recession numbers and only about 4 percentage points away from Great Depression peaks.  

The Labor Department last week reported April unemployment for the United states at 14.7%, but this according to their own admission was undercounting the real rates.  Be careful of any numbers coming out of the mainstream media or government sources.

https://www.sfchronicle.com/business/article/Coronavirus-job-loss-Weekly...

Some jobs will definitely come back, but many will not.  For example, JC Penny's reported that they are permanently closing 200 of their 850 nationwide stores.  Those jobs will not be coming back.  There are weekly reports of many cafes, restaurants, and small businesses shuttering their doors for good.  Those jobs will not be coming back.

Even for the companies that do not shut down, it may be a long haul before economic activity has picked up enough to bring workers back.  In most cases, it will not be a quick recovery.

Hang on for a very rough ride.

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Dhyerwolf's picture

Not based on the numbers of working people. The BLS numbers are the correct baseline, so it's the worse-case scenario here.

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@Dhyerwolf @Dhyerwolf

Would you be able to explain what age-based means? I'm afraid I don't quite get it. (Does that mean the Fed is somehow double-counting?)

Also, I could be entirely mistaken, but I was kind of under the impression that the BLS statistics do not count farm workers. I was thinking that might be part of the reason for the difference in counting. But, that could just be my brain misremembering things.

Thanks for any clarity you can bring!

And edit to add: Interesting, isn't it, how it seems that all our unemployment estimates seem to be based on the Fed's numbers . . . it's like a perpetual undercounting!

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ggersh's picture

@apenultimate and like everything else our govt does, the unemployment number is just pure BS

http://www.shadowstats.com/article/csfu1435

• Headline April 2020 Unemployment Really Was Around 20%, Not 15%
• Bureau of Labor Statistics Disclosed Erroneous Unemployment Surveying for a Second Month
• About 7.5 Million People in the April Household Survey Were Misclassified as Employed Instead of Unemployed, per the BLS
• Headline April U.3 Unemployment at 14.7%, Should Have Been 19.5%
• The BLS Had Disclosed the Same Surveying Error Last Month; Where Headline March 2020 U.3 Was 4.4%, It Should Have Been 5.3%
• Per the BLS, Headline Data Will Not Be Corrected: “To maintain data integrity, no ad hoc actions are taken to reclassify survey responses.”
• Nonetheless, Headline April Unemployment Soared to Historic Highs from March: U.3 from 4.4% to 14.7%, U.6 from 8.7% to 22.8% and ShadowStats from 22.9% to 35.4%
• More Realistic, Those Same Unemployment Numbers, Corrected: U.3 from 5.3 % to 19.5%, U.6 from 9.6% to 27.7% and ShadowStats from 23.7% to 39.6%
• April 2020 Payrolls Collapsed by an Unprecedented 20.5 Million Jobs
• Annual Growth in April 2020 Money Supply Measures Soared to Historic Highs
• U.S. Economic Activity Has Collapsed to Great Depression Levels, with the Federal Reserve Creating Unlimited Money

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“Awesome! I always wondered what it was like to live during the times of the Civil War, Spanish Flu, Great Depression, Civil Rights Movement, Watergate, & the Dust Bowl. Not all at once mind you, but ya know, ‘beggars/choosers” and all.”

@ggersh

Thanks for that. Seems like a large percentage of the difference is that BLS says 7.5 million were mis-classified as employed.

At the very least, it seems the BLS does a bit of correcting, whereas the Fed does not.

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ggersh's picture

@apenultimate feature, not a bug.

https://fair.org/home/us-jobless-rate-broke-depression-era-record-but-mo...

Ignored by nearly all US news organizations, at least initially, was an explanation made by the BLS at the end of its press release on the April layoffs, explaining that the official U-3 unemployment rate, which is supposed to measure jobless people actively looking for work, was actually incorrect. In a boxed 572-word addendum appended to its press release (and referenced in a note at the top of the release) was the following explanation:

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“Awesome! I always wondered what it was like to live during the times of the Civil War, Spanish Flu, Great Depression, Civil Rights Movement, Watergate, & the Dust Bowl. Not all at once mind you, but ya know, ‘beggars/choosers” and all.”

Dhyerwolf's picture

@ggersh Although I will say that that particular issue is more likely one to blame on incompetence and not malice based on first-hand knowledge of how stuff like this is put together.

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Dhyerwolf's picture

@ggersh @ggersh people were misclassified in the survey data. Granted, not enough to pay $89!

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ggersh's picture

@Dhyerwolf @Dhyerwolf the price of stocks, it might be the one metric that tRump understands about the economy.....nah

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“Awesome! I always wondered what it was like to live during the times of the Civil War, Spanish Flu, Great Depression, Civil Rights Movement, Watergate, & the Dust Bowl. Not all at once mind you, but ya know, ‘beggars/choosers” and all.”

Dhyerwolf's picture

@apenultimate So they only care about age.

The CPS (BLS/Census) measures about 2.25 million workers in agricultural sectors. Based on my knowledge of how data is gathered, there shouldn't be any type of work this categorically misses.

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Using employment as the primary means of providing a discount on services is disastrous in normal circumstances. Under these circumstances we have today it’s a humanitarian catastrophe.

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gulfgal98's picture

stated in the very beginning of this video, that of people who were employed in February of this year, nearly 40% of those earning $40,000 or less have become unemployed. This is an unprecedented human tragedy that Congress in all their bailouts now totalling about $8 Trillion have seen fit to throw a one time pittance of $1,200. With mountains of cash going to corporations and lobbyists, Congress insultingly gave real suffering Americans a few pennies and in effect told them that their lives do not matter to Washington DC.

Many of these jobs were in service industries and will never return. As many as 40% of small businesses will never reopen and as many as 25% will fail within a year. This is unconscionable. And yet, Congress has created an open window with no real oversight for the big corporations and has failed to actually meet the needs of small businesses with their underfunded Paycheck Protection Program.

All of this promises to not have a good ending, not because of Congress hasn't provided funding for bailouts, but because Congress has refused to bailout those who need it most. Our country has become increasingly overtly cruel to its own citizens.

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"I don't want to run the empire, I want to bring it down!" ~ Dr. Cornel West

“Those who make peaceful revolution impossible will make violent revolution inevitable." ~ President John F. Kennedy

The Liberal Moonbat's picture

...but what's so special about the St. Louis Fed? Why do I keep hearing about it? Does every state have a Fed?

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In the Land of the Blind, the one-eyed man is declared insane when he speaks of colors.