Real quick here
The latest week's initial unemployment claims figures came out today. And they show claims have plummeted from their highest levels three weeks ago. I take this as a signal that the second wave of viral infections is not leading to a second large wave of layoffs.
The seasonally-adjusted initial claims figure came in at 1.186 million, bringing the 4-week average down to 1.337,750. But these numbers understate how quickly the figures have fallen.
Just three weeks ago, 1.5 million people filed initial unemployment claims as the second wave hit. That was the first time since the lockdown that claims had risen.
Seasonal adjustments lowered that figure to 1.3 million. By contrast, this past week there were 984,192 initial unemployment claims, with seasonal adjustments raising that figure by just over 200,000. So while the seasonally-adjusted figures only show a decline from 1.3 million to 1.2 million claims over the past three weeks, the actual unadjusted decline is over 500,000 claims.
If you had asked me three weeks ago where unadjusted initial claims would be today, because of the second wave of infections, I would have said near levels of three weeks ago or higher. Instead, they are much lower. My takeaway, then, is that the second wave impact on layoffs is now largely over.
We should expect initial jobless claims to continue to decline. It's good news for the US economy that fewer people are losing their jobs now. But, twenty weeks in, the number of weekly job losses is still higher than previous peak losses in all recessions in recorded history back to 1967. And the US still faces significant economic headwinds because of the massive number of still unemployed people.
The question now goes to what Congress will do about the fiscal cliff.
I'm going to say it is too early too tell if the pickup in claims is already over - there is a small second wave of layoffs associated with the shuttering or cancellation of reopenings. But that is ongoing it seems, and data collection lags and errors, seasonality issues, etc, is so epic now that we definitely need more than a week to call anything a trend. Once people slow their visits to these businesses, or they are scaled back in occupancy, or they are closed again, the layoffs happen a bit later, but the system is already backlogged, so these claims wont get processed. Plus, the states that are experiencing this have horribly outdated UE claims situations, after years of underfunding.
But the biggest issue of course is the fiscal package that is probably cobbled together this week, and whether it addresses PPP in a meaningful way, as well as whether demand is clipped from scaling back UE payments. Thats when we will see the bankruptcy wave start if we dont manage to get the virus under control soon.
And the problem there is simple : schools. We will make some progress in August, and it will be completely undone and more come September.
We have such a long way to go to slog through this. There really is no hope of any meaningful and lasting progress until this administration is thrown into the garbage heap and burned. Everything the states try to accomplish is ultimately underminded from the top.
And yes, we are closer to a vaccine, but we are a long long way from when that is produced, and administered widely and effectively, and again, the administration's history of corruption makes uptake of any early vaccine lower than it should be do to avoidance (and this is not the anti-vaxxers, but many people including a lot of RNS and medical people who do not trust Trump or anything he promotes. (see hydroxycholoroquine.)