Initial Claims spiked the most in 384-weeks (most since Nov 2012) in the latest week, rising +70K to a 4Y high at 281K.
As insipid as this morning’s data is, it will only serve as an unsavory appetizer for next weeks dystopian entree …. and, by extension (& to mix metaphors), the first salvo in COVID-19’s onslaught against domestic consumption.
It’s mostly anecdotal patchwork at this point but the inimical trinity below paints a clear enough picture as it relates to what’s coming down the Claims pike:
- California has seen Initial Claims rise from 2,000 to 80,000 (per day!)
- Ohio has seen Initial Claims rise 70X (and that’s only the Mon-Wedn total)
- Online search activity for Unemployment (Google Trends) is mirroring credit spreads and cross-asset vol, essentially going vertical.
A couple notes and a reminder:
- The number of people attempting to file won’t all be approved as they won’t technically qualify. For example, instead of being explicitly laid off, some workers have been classified as some version of “employed with a 0 hour work schedule”. Not sure how pervasive that nonsense is but variants of it will impact peoples capacity to claim unemployment benefits.
- Some of the same structural changes in the labor market that have helped drop claims to multi-decade lows may also limit individuals eligibility for benefits (“gig economy” jobs, higher term & part-time workers, post-crisis regulatory/structural changes by states that tightened requirements and reduced eligibility for Claims, etc)
And a now trivial reminder that Domestic Consumption – which had been the last bastion of strength supporting both the domestic and global cycle – represents just under a 1/5 of global GDP.
