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Takeaway: Total claims filed since Covid began just eclipsed 63 million. Expect further surges ahead.

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HEDGEYE FINANCIALS WEEKLY LABOR MARKET READING

Long-Term Unemployment Beginning To Set In - 05.28.2020 covid jobs report cartoon  2

Recall, the data from three weeks ago included a change in methodology. As such, the data from three weeks ago represented the first week reflecting the methodological adjustment, with prior weeks not being revised, new and old seasonally adjusted data will not be comparable.

Long-Term Unemployment Beginning To Set In - Summary

Initial unemployment insurance claims (SA), filed in the week ending September 26th were 837K, down -4% w/w. Cumulative initial claims have now hit ~63 million, although this includes a fair amount of duplicate filings and over-counting on both the state and PUA levels.

Long-Term Unemployment Beginning To Set In - Initial

Pandemic Unemployment Assistance (PUA) claims filed in the week ending September 26th were 650K, up +6% 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.

Long-Term Unemployment Beginning To Set In - 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 state programs for the week ending September 19th, 2020, were 11.77 million, down -8% w/w. Continued claims of 11.77 million are currently ~1.78x the previous high-water mark of ~6.6 million set during the financial crisis. 

Long-Term Unemployment Beginning To Set In - Continuing

Long-Term Unemployment Beginning To Set In - Composition

Layoff headlines abound with the expiration of the airline retention period and companies like Disney announcing 28k theme park workers being transitioned to permanent furlough. We would expect to see upward pressure on claims in the next few weeks. 

It's also important to note that growing numbers of recipients are now passing 26 weeks of benefits. This is significant because most states have a 26-week limit on benefits, but most also make exceptions during periods of high unemployment such as the current environment.

Nevertheless, the longer people remain unemployed the greater the toll on their livelihood and worse their chances for economic recovery. 

While there's some modest positive from the falling number of initial claims, the fact that we are now 28 weeks removed from the onset of Covid lockdowns and are still recording upwards of 800k initial jobless claims per week, not including the over 600k PUA initial claims per week, is simply mind-boggling.