Takeaway: Initial state claims of 1.01M fell -8.9% w/w while PUA claims of 608K rose +16% w/w as continuing claims of 14.5M declined -1.5% w/w.

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Continued Unemployment Insurance Claims Total 14.5 Million  - 04.03.2020 unemployment line cartoon  4   2

HEDGEYE FINANCIALS WEEKLY LABOR MARKET READING

First, some big picture color from Hedgeye's U.S. Macro and Housing Analyst Christian Drake:

  • Approximately 30 states have been approved for reinstated and reduced enhanced unemployment benefits sourced from the (very) finite $44B in disaster relief funds from FEMA. Only a couple have begun disbursing those funds and while benefits will be backdated upon approval, funds are only expected to last a matter of weeks with recipients receiving 30% less than the prior enhanced benefits, at best, and -66% to -100% less at worst (see last weeks note for a fuller review).

  • The rolls of those unemployed for 26+ weeks is progressively building (i.e. in the millions and rising) – those individuals will be rolling out of benefit eligibility and at increasing risk of structural unemployment/disaffection/hysteresis.

  • As a reminder on a basic filtering of the weekly data … Initial State Claims and continuing PUA claims both overstate the level of job loss (due to multiple filings and catchup effects associated with backlogged claim processing). On the other side, however, continuing or total claims understates the magnitude of impact to aggregate consumption capacity as it doesn’t capture reduced hours or those who don’t qualify for UI benefits

 Continued Unemployment Insurance Claims Total 14.5 Million  - Summary

Initial unemployment insurance claims (SA), filed in the week ending August 21st, were 1.01M, down -8.9% w/w.

Cumulative initial claims have now hit 58.4 million, although this includes a fair amount of duplicate filings and over-counting on both the state and PUA levels.

Continued Unemployment Insurance Claims Total 14.5 Million  - Initial

Pandemic Unemployment Assistance (PUA) claims filed in the week ending August 21st were 608K, up +16% w/w. 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.

Continued Unemployment Insurance Claims Total 14.5 Million  - PUA

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 unemployment insurance claims (SA), the total number of people claiming benefits in all programs for the week ending August 14th, 2020, were 14.5 million, down -1.5% w/w.

Continued claims of 14.5 million are currently ~2.2x the previous high-water mark of ~6.6 million set during the financial crisis. 

Continued Unemployment Insurance Claims Total 14.5 Million  - Continuing