Rolling US Economy Into The Shitbin Thread

6.66 million, surely

sign of the times

p sure more jobs now wiped out than added during the entirety of the Trump presidency -- and I don't mean that solely as a commentary on Trump, just a point of comparison.

stock market flat. I guess it's "already priced in" as they love to say on the street

The mammoth US unemployment claims in their historical context. pic.twitter.com/UNDwhBMpZt

— Ben Riley-Smith (@benrileysmith) April 2, 2020

Woooowwwwww

yeah. i knew this was severe but didn't "get it" before i saw that chart.

yeah this is why the market dropped 10,000 points a couple weeks ago

we closed down most of the businesses in this country to fight the pandemic i'm still confused by discussions of unemployment that don't start with this obvious fact??

yes there are an enormous amount of unemployed that's bc we unemployed them over the last few weeks by diktat

I can't help but worry that we are going to see worse soon -- the level of both corporate and personal debt default that's coming if this doesn't abet soon is going to be unprecedented.

Debt jubilee!!!!!

xp -- I guess I'm not clear on what point you think that makes, Mordy? We "did it on purpose" but the economic effects would have been even worse if we hadn't. It was a "choice" but a choice dictated by an unprecedented scenario. Certain industries may never fully recover, others could take years.

I don't think hotels or airlines will ever operate at the levels they were operating again, for example. A lot of excessive business travel is going to permanently disappear.

my pt is that it's weird to be shocked about historically high unemployment numbers when you shut down a large % of the businesses in your country. it's not shocking, it's per plan.

From airline pilot and popular aviation writer Patrick Smith, of Ask The Pilot, this very sobering report.

“Was that the last commercial flight I will ever pilot?"https://t.co/C41OpFjyxp pic.twitter.com/8looHR4enc

— James Fallows (@JamesFallows) April 2, 2020

xp to mordy

you don't think it's surprising to some people that this is already affecting jobs soooooo much more than the peak of the 2008/9 crisis? sure, YOU understood it before most people, but that assumes a level of general population economic and general data literacy that is unrealistic

btw, estimated unemployment is around 13% now

https://i.imgur.com/Lu7hqMQ.png

https://www.nytimes.com/2020/04/03/upshot/coronavirus-jobless-rate-great-depression.html

It maybe shouldn't be a surprise, but it's a completely unprecedented jump, and we have no idea how it will play out over time.

since a number with a (?) by it is less than convincing, here's the accompanying article:

The jobless rate today is almost certainly higher than at any point since the Great Depression. We think it’s around 13 percent and rising at a speed unmatched in American history.

The labor market is changing so fast that our official statistics — intended to measure changes over months and years rather than days or weeks — can’t really keep up. But a few simple calculations can help piece together a reasonable approximation.

Be warned, these numbers yield an imprecise estimate of today’s unemployment rate, and the truth could easily be quite a lot higher or lower. This is not an estimate of the official unemployment rate for March, which reports the state of the economy a few weeks ago when the labor market was in better shape, nor is it a forecast for the official rate in April.

The Labor Department reported on Thursday that around nine million people had filed for unemployment insurance over the past two weeks. (That number is not seasonally adjusted.) By contrast, in a healthy economy, fewer than half a million people would have done so. This suggests there are around 8.5 million more people on unemployment benefits today than there were two weeks ago.

There are important differences between who receives unemployment benefits and whom the official statistics measure as unemployed. (The former is based on eligibility for unemployment insurance, while the latter is based on who responds to government surveys that they are actively looking for work.) But it is likely that nearly all of these people will show up in the official statistics. After all, you qualify for unemployment benefits only if you’re actively looking for work.

In addition, independent contractors, including many gig economy workers, most likely lost their jobs but did not qualify for benefits. (The recent fiscal package passed by Congress will change this in coming weeks.) It is hard to be precise about how many people fall into this category, but a round, conservative guess might raise my estimate of the number of job losers to 10 million from 8.5 million.

State unemployment offices have also been overwhelmed, and it’s likely that some people have tried to claim benefits but are not yet counted officially because of processing delays. This might add a further million to our estimate, bringing it to 11 million.

The unemployment rate is calculated as the ratio of those who are unemployed to those in the labor force. The labor force is around 165 million, so if 11 million extra people have lost their jobs, the unemployment rate will rise from around 3.5 percent in February to around 10 percent.

But that’s not the whole story.

The latest initial claims data report the total number of claims only through March 28. Since then, it’s likely that an additional four million people have lost their jobs. We’re now up to an extra 15 million people unemployed, which would bump the unemployment rate for today up to around 12.5 percent.

So far, these calculations reflect only the rise in unemployment caused by job loss, but it’s likely that there has been a steep drop in hiring as well.

In the 2008 recession, the rate of separations — that’s the technical term for when workers and their jobs part ways, both voluntarily and involuntarily — actually fell. In that recession, the decrease in employment was entirely due to a very sharp decline in hiring.

The Bureau of Labor Statistics reports that in a typical month, nearly six million workers are hired, a rate of 1.5 million per week. Again, it’s hard to know how much that has fallen, but if the hiring rate fell by a fifth over the past three weeks, that would mean that roughly one million fewer people found work than might otherwise be expected to.

At this point, our calculations show 16 million more people without work, for an unemployment rate of 13 percent.

These are obviously rough estimates. One important limitation is that these calculations do not account for the possibility that some number of people who lose their jobs will leave the labor force rather than continue to search for work. To the extent that happens, these numbers overstate the rise in unemployment.

Given the many uncertainties involved, perhaps it’s better to say that unemployment has risen by 10 million to 20 million, which means that the unemployment rate is probably between 10 percent and 15 percent.

That might sound like an unsatisfyingly unclear conclusion, but it’s a product of how poorly our official statistics track labor market changes from day to day, and how rapidly the economy is shutting down.

it's also not true that this is entirely "by design." No one could predict exactly how many businesses would lay off how many workers and how quickly. The decision had to be made too quickly to even fully take that into account, and it would be impossible to model.

i guess i assumed the correlation between closing most businesses and rising unemployment would've been immediately perceptible - the 2008/9 crisis impacted numerous industries + sectors but it wasn't on the scale of "all restaurants, hotels, gyms, malls, theaters, retail stores, etc etc are now closed every white collar worker is now wfh."

the economy is just so obviously a result of the pandemic and not the mover of the crisis itself whereas in 08/09 the economy was the crisis itself. when the economy is failing for reasons of its own the answer is more complex bc you are trying to fix the economy. there's no fixing the economy here - the only answer is robust state support until the pandemic is over.

i'm imagining some 14th century european advisor showing a productivity graph to the feudal lord that shows massive unprecedented losses in his vassal holdings and he's like "wow i knew the plague was bad but i didn't realize it was hurting our economy this badly"

i'm imagining some 14th century european advisor showing a productivity graph to the feudal lord

haha, sure, but the scenario during our times is more like some guy on a couch watching hannity and being told that this wasn't a big deal, before cutting to a shot of a press conference where trump also says it's not a big deal, while all the government officials stand behind him and seem to agree (a setup that is viewed as a "hostage situation" by the left, but utterly fools a lot of people).

the economy is just so obviously a result of the pandemic and not the mover of the crisis itself whereas in 08/09 the economy was the crisis itself.

sorry to quote you a bunch, mordy. not trying to pick on you, and i'm not trying to "provide the correct answers". i'm not sure of a lot of this myself, but your questions are a good foil.

i think one big danger is that even if the prime mover was clearly the pandemic, the secondary and tertiary effects could very easily destabilize other parts of the economy that maybe weren't so stable to begin with. the 2008/09 stuff started with subprime mortgages defaults and credit default swaps, and quickly spread to a banking liquidity crisis and a million other things. this one will start with mass unemployment from the pandemic and also spread to other problems that i'm not going to pretend i understand (at least not at this point in time).

i feel like the underlying premise you have is that the underlying fundamentals of our economy are strong, so we can just return to BAU when testing is more widely available and more people go back to work. i am working from the lefty assumption that no, it was a house of cards, and this kind of thing can knock the whole house over.

i just remember months of months of people warning that we were heading into a recession soon, before coronavirus was a thing. not just because it had been a while since the last recession and it seemed like we were "due", but because of underlying issues. the inverted yield curve, for one.

https://www.vox.com/policy-and-politics/2019/3/27/18250823/recession-prepare-when-inverted-yield-curve

i think it's going to be hard to sort out what was caused by closing down so many businesses and those results (unemployment, debt + default) from what were systemic problems and while i think the left will be very keen to argue that the problems were from pre-existing systemic issuee, i think they will struggle to make that case convincingly bc of this entanglement. it's such an unprecedented event i think it'll be difficult to demonstrate what problems are not the fault of the pandemic and examples i've already seen to the contrary tend to make the case for autocracy much more than socialism (and lots of countries with more socialized medicare for example are not covering themselves with glory here etc when all you have is a hammer...)

my argument is that "this kind of thing" can knock your house over no matter what it is built out of and while i agree with your goals generally i think it's hard to make the case here

the uniqueness of this event makes using it to conclude anything about about the foundations of our economy seem a little misguided even to me, the conclusory posts guy

mordy why did it take me until this exact second to realize that our usernames are built on almost the same principle, but yours with a first name instead of a last name

lol i'm not sure but i do go by mordy irl

I use this as my username in as many contexts as possible which means some people do end up calling me it irl

I don't think you need to subscribe to the belief that american capitalism was a house of cards to believe that a pandemic that's gonna disrupt commerce across the world for the rest of the year will inflict significant, lasting economic pain beyond the temporary shutdown

Some good stuff here:

https://www.politico.com/news/magazine/2020/04/02/coronavirus-economy-reopen-deaths-balance-analysis-159248

at best we're going to walk back out into our cities and see a graveyard of vital community businesses that won't all come back no matter how much small business loan funding there is

fwiw i think in some ways it's an excellent opportunity for massive leftist projects in the US both temporary and permanent (and some temporary measures like UBI might eventually become permanent) depending on the scale of the crisis but i imagine this is just the beginning of the unemployment crisis as both time passes (and so ppl's circumstances become more dire) and grows (as more regions and businesses are impacted)

i just don't buy "hey if only we were already socialist we wouldn't have a problem of everyone losing their jobs" even socialist countries need economies.

interesting to note mortality rate went down during great recession and great depression

my hope for the future is that we can center conversations around the economy less on how much we produce (GDP growth, stock index performance) and more on what we produce (health care, housing, nutrition, employment for all)

like the rona disrupts what we produce, both frivolous and necessary goods/services, so no economic orientation can possibly be immune to its effects. but an economy predicated on meeting everyone's needs could weather this better than our system which makes these goods out of reach when personal income is gone.

it's definitely a bit dishonest to peg all the struggles we're going through on Trump/capitalism but at the same time we built a nation where health care is a commodity and our leaders tell us to not trust the experts or the media, so what could've been a 4-week ordeal is gonna extend into the fall. it's like the virus is Tim Tebow and we're all the Pittsburgh Steelers, playing Cover 0 and just begging him to throw deep, and when he finally hits a wide open receiver it's all over

i hope something like that grows out of this current situation - i think coronavirus could create a change in consciousness that allows us to better and more compassionately structure our society. it would take nothing less than human enlightenment imho in the pre covid-19 world such a realignment seemed impossible. xp

one could easily imagine obama handling this crisis a million times better than trump even before we get to capitalism vs socialsim.

fp'd you frogbs

Any "hot takes" on whether these payroll protection programs and government-funded leave programs et al. will keep people employed? Whether these are biased in some way or another?

sarahell, how do you feel about the 401k/ira early withdrawal that's in the bill?

i missed that part what is it

from Barron's, i guess this is a decent summary:

In addition to allowing retirees options to defer required minimum distributions, the so-called Cares Act will allow eligible individuals to withdraw up to $100,000 from their retirement accounts, in total, without the 10% early-withdrawal penalty as long as they pay back the distributions within three years. The relief package also eases some of the rules surrounding 401(k) loans.

To qualify for the provisions, individuals need to fall into one of two main categories. You, your spouse or a dependent is diagnosed with Covid-19, the disease caused by the new coronavirus. Alternatively, you qualify if you have experienced adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care or closures related to the coronavirus pandemic.

i mean the idea that you have to pay back as much as 100K (OVER THREE YEARS!?!?!) to a 401K in times of dire need is kinda insane to me but what do I know I'm advocating for violent revolution