Takeaway: Initial state claims of 1.5M + PUA claims of 705K combined for total claims of 2.5M - this equates to joblessness of >20%.

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Weekly U.I. Claims | Relatively Better, Absolutely Bad - 05.08.2020 jobs tree stump cartoon


Observing the table below, in addition to the 1.5 million regular state unemployment insurance claims, there were an additional 705K million Pandemic Unemployment Assistance (PUA) claims filed. 

Recall, PUAs are part of the CARES Act and cover workers ineligible for traditional state UI assistance, including independent contractors, self-employed individuals, and others as detailed in the CARES Act. In other words, the real, total initial claims filed last week is actually 1,542,000 + 705,676 = 2,500,073, which is down ~252K from the week prior week. 

Jobless claims are likely tracking in the vicinity of ~38 million now. As of May 23rd, there were 29.5 million people collecting insurance (State: 19 million + PUA: 9.7 million + Other: 0.8 million). In the last two weeks (05/30 and 06/06), a further 1.5 million PUA + 3.4 million State have filed.

Thus, 29.5 million + 1.5 million + 3.4 million = 34.4 million, which on a labor force base of 153 million (34.4/153), yields an unemployment rate of 22-23%. Now, to be fair, a portion of those collecting unemployment insurance are doing so because of reduced hours and not full unemployment. These workers are classified under "Workshare" programs and are reflected in the second row from the bottom of the following table.

Nevertheless, it's safe to say that the unemployment rate reflected in these figures likely exceeds 20%.

As we have said previously, either the economy is much worse than the market thinks or there is an unemployment insurance gravy train that everyone is jumping onto - or a little of both.

In rate-of-change terms, weekly initial state claims, weekly initial PUA claims, continuing state claims, and then number of people claiming benefits across all programs improved w/w.

Weekly U.I. Claims | Relatively Better, Absolutely Bad - CLaims

Nonetheless, in absolute terms, things remain historically bad.

Given the unprecedented speed with which initial claims have manifested, our view remains that the best way to contextualize the magnitude of the labor market crisis is to look at continued claims.

Continued claims of 21.5 million are currently ~3.1x the previous high-water mark of ~6.6 million set during the financial crisis. 

Weekly U.I. Claims | Relatively Better, Absolutely Bad - 6 11 2020 5 33 53 PM