Another Thursday, another week of “improvement” in Jobless Claims … a broken record analytical refrain that, despite the collective desensitization turned apathy, remains tragic on an unprecedented level.
The Claims cataclysm is now 33-weeks old with cumulative Initial Claims totaling 66.6 Mn.
If the metaphorical numerical-religious nuance is lost on you there, that’s 33 (Jesus’s terminal age) vs 66.6 as the tragi-drama between good (plodding organic improvement) and evil (cumulating structural damage) remains on conspicuous, real-time display.
In any case, on a pre-pandemic peak employment base of 152.46 Mn, claims equivalent to roughly 44% of the entire national labor force have now been filed. Of course, Initial Claims overstate the magnitude of job loss due to multiple/redundant counting, fraud and repeat claimants (individuals losing their job more than once) but that nevertheless remains a harrowing statistic.
Similarly, Continuing Claims – which remains the metric to monitor vis-à-vis marginal change, particularly as it relates to flow through to PEUC Claims – understates the level of job loss and lost consumption capacity is it doesn’t capture the impact of reduced hours, those ineligible for UI benefits and those rolling off eligibility altogether.
At this juncture, both the setup and associated weekly analytical exercise remain fixed. To redux, that is:
- We are now 33 weeks into the onset of the pandemic driven increase in Jobless Claims. Normal State UI Benefits last 26 weeks. This temporal sequencing continues to drive most of the shifting dynamics within the numbers. That is ….
- Continuing Claims continue to fall but mostly due to people exhausting eligibility ….
- Those individuals losing eligibility will either drop-off altogether or will roll-into PEUC claims or other Extended (state) Benefits.
- Over the prior 5 weeks (weeks corresponding to where we have both Continuing Claims (delayed 1 week) and PEUC (delayed 2 weeks) and weeks since hitting the 26-week state eligibility limit) Continuing Claims have fallen by 4.92 mn while PEUC Claims have risen by 2.15 mn implying that roughly 44% of the drop in Continuing Claims is due to transitioning over to PEUC Claims and further implying that combination of those transitioning to PEUC + those transitioning to total loss of benefits represents north of 50% of the “improvement” in Continuing Claims (and potentially significantly more than 50%).
This first chart below visually summarizes the ‘accounting’ shift and distribution as it relates to the change in Continuing Claims. Again, Friday’s NFP data will go a long way in signaling how much of the drop in Continuing Claims and Total Claimants is due to re-employment or straight benefit roll-off.
Bigger picture, the pace of labor market improvement is moderating, Europe is staring down an impending double dip, domestic fiscal support measures have been exhausted and the prospects for further large-scale stimulus have diminished. Meanwhile, we notched a lamentable pandemic milestone stateside breaching 100K cases/day and Service Sector (ISM) activity appears to be softening … threatening 2nd wave service sector slowdown, job loss and SME solvency risk as we approach the ides of lame-duck winter and the expiration of all pandemic related support programs (PUA, PEUC along with rent/eviction moratoriums, etc) on December 31st.
But … you know … no fiscal = no incremental income/job support = reflation ↓ = more QE = Pavlovian market response = asset price inflation.
In other words, by the transitive property – and in perfect, post-GFC inequality perpetuation fashion, no job gains = asset prices up.
Turning water into wine ! ....
