A 3000% jump in jobless claims has devastated the US job market
cnn.com
cnn.com
I think many of these workers are laid off so they can get unemployment benefits, and they'll be hired again by the same companies as soon as the quarantine ends - which should take a couple month if we look at what happened in China.
Sure, some companies will die from losing all of their business during the quarantine, but the number of jobless claims is not representative of the workers who will still be out of a job after the quarantine.
We may also be looking at permanent changes in behavior. Sure, there is a lot of pent up demand for getting out and socializing, but if people are being bled dry by meager stimulus checks, they're not going to rush to fill the restaurants and malls when this is over.
Edit: Just saw this, an interview with El-Erian on liquidity issues, https://www.youtube.com/watch?v=MjzBKtVTdtQ
And there's no way the economy will fully reopen before at least a year. China is not a good comparison, because 1) the US did not follow the same approach as China in dealing with the virus, 2) China has been lying about their economy and number of cases and 3) even if China was fully open for business now, the biggest markets are not buying - Europe and the US are just beginning a huge recession, that in turn will hit China back and will affect the recovery of the world economy.
A V shaped recovery is, in my opinion, a made up dream to keep people from panicking.
But just like before, it's "subject to status".
Which roughly means, if you really need it, the answer is no.
On the contrary, so far it appears US cases will peak much higher and later than in China, and a lack of resources at the state and local level will massively slow any subsequent recovery.
The best numbers I've seen for projecting US cases and deaths honestly seem to be pretty good:
https://covid19.healthdata.org/projections
This projects less than 100k deaths in the US this year. Compare that to heart disease (largely preventable) at 650k a year. That'd also make it only about 5 times worse than a bad flu year. (Edit: thanks for the correction below; if correct, this would be only about 2 times worse than a bad flu year.)
Compared to the millions of people dead in the US that many were projecting just a few days and weeks ago, this is indeed good -- in fact, very good, because it seems many fewer people will die.
Also, that 100,000 assumes everyone in the country follows proper physical distancing, hand washing, etc. Last I checked, the state of Florida is still allowing for church services during their "lock-down".
It's true the administration could have acted sooner. It's also true the opposite party was smearing 'racism' and 'xenophobia' even as shutting flights down was obviously the right move. This is not a scenario where any politician can claim to have done better.
In fact, world-wide we have seen a variety of responses, with no definitive answer on what has been good and what has been bad. It's a horrible situation for any national leader.
As to the number of dead.... it is what it is. Is it good? Certainly not. Could it be worse? Certainly. Does anyone have all the optimal answers. Certainly not.
We’re in “virus time” now and there will not be an end until a vaccine is manufactured and distributed.
On again off again quarantines are now ‘normal’.
Best way to guage the toll is take a glance at deaths in 2019 vs 2020 and the difference is covid-19 related. Even if it's a heart attack who couldn't get into the ER because it was full...etc..
Also some people are out of the ICU (at least in France) and will have to do 3 to 6 month of reeducation for the best cases. For the worst cases (still in ICU at the moment, at least in Colmar), its 20 years shoved off (lung fibrosis), one of them is younger than me. I guarantee you lethality might be what we're talking about now, but next year it will become secondary.
This is shittier than i thought.
People who believe the data coming from China is accurate are ignoring the recent history on transparency around this disease from the CCP. I just don't understand it. Sure, the country where police arrested the first doctors to publicly state it was human to human transmissible is being completely honest. Wow.
Two things can be true at the same time: Trump administration has done poorly AND the CCP is culpable, lying, and made the situation much worse.
But in the US political system, there is no tolerance for distraction from hating the opposition party. You can only blame Trump, and saying bad things about China is "just racist and mean. They did such a great job, they say they have contained it. We didn't because the bad orange man didn't do his job."
Yeah, meanwhile, those of us living in reality know that Trump and the CDC/FDA suck, AND the CCP does too. And yeah, maybe, just maybe, if the US news media had dedicated 1/20th the coverage they gave to the impeachment to the virus, the government would have been held accountable to start acting then. I was travelling internationally, and when I got back home in early February, I was shocked at how little CNN and MSNBC were talking about the virus. Basically zero. And Fox only talked about it in the context of the impeachment distracting from it.
When governments fail, we hope that the free press will hold them accountable, and there's no reason they couldn't have done that earlier. No, the red vs. blue team sports are just too good for ratings to talk about things that actually matter.
Remember how Trump was roundly criticized as 'racist' and 'xenophobic' for stopping flights? The Democrats have to own that one, their answers were flawed and would have cost lives as well.
But really-- nobody has all the optimal answers. War is hell.
Testing and social distancing were the steps that were needed on day one. They didn't happen fast enough and aren't happening fast enough.
It is not politicizing things to state the fact that his responses have been slow and poorly informed.
Hopefully, yes, although this turnaround has some unfortunate bureaucratic costs to both the employees and employers. I hope those small-medium business loans work for keeping a reasonable number of people on payrolls. While the administration of those loans has its own potential pitfalls, in some ways it seems like the better path than leaning on the unemployment insurance system.
That is highly doubtful. Many companies can't survive even 2 months of inactivity and will fold.
>which should take a couple month if we look at what happened in China.
China is undergoing a second wave right now [1] due to unlocking quarantine too early. It's extremely likely that they will be undergoing a second lockdown. Anecdotally, speaking to a lot of my friends in NYC most everyone who is currently WFH (myself included) isn't planning on returning back to the offices until at least the end of the year. Realistically, I think we won't fully get rid of lockdowns until vaccine is available and 80% of the population is vaccinated.
[1] https://www.bloomberg.com/news/articles/2020-04-02/chinese-c...
The downright dreadful forecasts coming in about 2020 GDP double digit declines seem to me to warrant a larger decline in equities.
I think a lot of folks think this will be a sharp V recovery, but I'm not so sure. I'm already seeing knock-on effects in the real world. People in tech being laid off; (formerly) rich folks cutting way back on planned spending; entire projects canceled, etc.
This is our new reality until a vaccine is manufactured and distributed.
GDP growth declined -0.1% in '08 and -2.5% in '09
This does seem to be accelerating, although recall that this year opened with a fair few headline-grabbing mass layoffs. It's hard to say that more weren't already coming, with the timetable just moved up.
1) A large portion of equity is held by large funds, which may be contractually unable to pull out of the equity market at all.
2) Lots of people are in it for a short term bump based on stimulus expectations
3) Most investments are made with a longer time horizon than the immediate pain of the short term, and thus, have no reason to sell now.
I think this could be an excellent rare economic data point to suggest the efficient market hypothesis does not work anymore (trumped by behavioral economics issues).
The reason the market didn’t tank today is because this jobs report was already priced in.
- Emerging markets, Japan, and Euro also being hit by the virus. Where else will capital flow?
- International bond markets selling off as credit risks rise removes bonds as the traditional flight to safety (US Gov Bonds being the notable exception).
- Strong US dollar vs. other world currencies gives international capital extra safety when parked in U.S. stocks.
- Large-cap U.S. equities such as those in the S&P 500 can generally weather short-term liquidity shocks like this, and if anything they will grow by absorbing the market share of failing small businesses.
While I agree in principle that the markets are trying to price in the downturn, I genuinely don't think that the median-dollar-investor abstraction really has a clue how long this is likely to last.
They are also kind of shocked that stocks are not plummeting and saying the market is rigged. Seems like a lot of people have been buying PUT options expecting the market to crash soon.
Reddit's investors haven't been known to be the a) smartest investors, b) most savvy investors, or c) adult humans.
https://www.oaktreecapital.com/docs/default-source/memos/whi...
TL;DR: markers are pricing in a V shaped recovery in a couple of months
So I would like to rephrase your question - what kind of permanent change do you expect in our society due to COVID-19?
While they are not technically buying stocks, every dollar of paper they buy from primary dealer inventory is a dollar that managers will find a home for.
The horrific employment news portends the need for the Fed to make $90B/day look like amateur hour in the near future. Hence, the run up in basically every single asset class today.
Understand that in an era of perpetual debt monetization, silly things like P/E multiples, employment, or earnings growth don't anchor stocks. Infinite liquidity combined with fund managers with a fetish for yield, no matter what the risk, are the only relevant mechanism in town. It's entirely possible to simultaneously have DJIA at 50,000 and half-mile-long lines for soup kitchens in this environment.
As an EU citizen, this sounds utterly horrifying to me. How can the US have that little protection of their workers..?
And even worse again is that healthcare is tied up to your employer..
https://www.state.nj.us/dobi/division_insurance/ihcseh/ihcra...
The metal levels indicate what portion of your expected healthcare costs the insurance is expected to pay. Bronze is 60%, Silver is 70%, Gold is 80%. At the bottom you will see age rating, so you have to multiply that factor with the premium to get the premium at your age.
For example, if you purchase bronze coverage (lets say $250) as a 50 year old in NJ, the factor is 1.78 times $250 = $445 per month divided by 0.6 due to it being bronze = $742 per month is your expected healthcare expenses.
Obviously this is not per month, but becomes more accurate amortized over ones' lifetime, as you might go with zero healthcare expenses for years and then get hit with $10,000 easily.
Bottom line is eat right, exercise, and either be poor enough to get taxpayer paid healthcare or be rich enough to not care about spending ~$20k per year per couple in their 50s on health insurance premiums plus have ~$30k or so ready for out of pocket costs in case of emergency. If something happens to you at the end of December, the out of pocket will reset Jan 1, so you need to have two years worth of out of pocket costs, and at around $13k or so, I ballpark it at $30k.
If I'm in the middle 30% to 80% wealth band of the US, I would plan on killing myself if my prognosis was poor to avoid draining the family's wealth.
EDIT: Follow-up question, the table ends at 64+, how do senior citizens pay for this without having a job?
But over the years, even that has been chipped down and is extremely confusing, with a combination of means testing and supplementary insurance programs that you need to buy to get "full coverage".
But basically, 65+ means if you go to the hospital, and get a $300k bill, it won't ruin your finances as the government picks up the hospital bills. I'm pretty sure. But there's Part A/B/C/D/etc, which cover different things like prescription medicines, non hospital healthcare, etc that are not paid for or partially paid for, and you have to buy supplementary insurance for those.
Also, health insurance in the US is not just insurance, it's also buying access to a set of healthcare providers that the insurance has negotiated pricing with, so that you don't get taken advantage of by the healthcare providers who can otherwise charge you whatever they want.
As you can see, the US spends a decent portion of its time trying to figure out how to take advantage of the system (i.e. each other) and wring out as much as possible while putting in as little as possible.
I've been doing it for 12 years. This isn't 'recent'.
People whose employers offered health insurance got to pay their premiums with pre tax money and contribute to HSA with pre tax money.
People whose employers don’t offer health insurance have to pay the premiums with post tax money. But they still get to contribute to HSA with pre tax money.
But in practice, it's so prohibitively expensive that many people just...don't. Pre or post tax, it's insanely expensive. Europeans would be shocked.
You know, it's probably not that a large problem because those are very few people, but this one is completely insane. I have no idea how nobody still found it completely opposite to fundamental freedoms. It just escapes being outright slavery because those people can run away to their home country.
Plus, my personal experience is that we easily found many OK candidates in the US but had trouble finding one in the EU. That either suggests that the EU has less skilled coders overall, or that the US has a higher rate of people who are unemployed or very unhappy with their current job.
Did you cherry-pick that one? Spain @ 14.2%, Italy @9.7%, France @8.5%. Spain was actually at 26.2% back in March 2013.
https://www.google.com/publicdata/explore?ds=z8o7pt6rd5uqa6_...
You can easily find dozens of countries with at will employment, and high unemployment.
And I think, Spain has actually less stringent worker protection laws than Germany.
No, not at all
The US has spent the last 65 years chipping away at unionization rates and other pro-employee protections. The overall rate of unionization in the US peaked in 1954 [1].
[1] http://www.dollarsandsense.org/archives/2011/0311reuss2.html
Would a person getting that treatment from you quit for a job where 10% of people got fired after the first month?
However, things can go too far in the other direction. Imagine a small business having to spend months and months trying to fire someone who isn't doing their job and hasn't been receptive towards coaching or critiques. This could seriously harm the team they work on, not to mention the overall health of the company.
I don't know what the best solution is. But there are some complexities here.
Thinking about it more, I suppose I've also had this implicit assumption that at-will employment has contributed to the disproportionate success of startups in America. It seems like it could be the case, but I don't have any hard evidence.
There is the federal WARN Act (1) but it has holes big enough to drive a train through (natural disaster and unforeseeable circumstance exclusions mean it doesn't apply right now).
As the sibling noted, potentially the most devastating impact of the jobless claims is loss of medical insurance. We'll likely see tens of thousands of personal bankruptcy filings as a result of this pandemic, many of which will be due to ER/ICU bills.
1 - https://en.wikipedia.org/wiki/Worker_Adjustment_and_Retraini...
I also know that people can use COBRA to keep their employer's insurance if they're laid off, but often this can be too expensive. But are they able to get a new insurance plan or do they just not have insurance if they don't keep their employer's insurance?
I get it that people will have other medical issues during this time. But whether it covers Coronavirus related-expenses makes a HUGE difference. Coronavirus is BY FAR the leading cause of hospitalization in the US right now. It's also the leading cause of death. For a month, it's likely to get exponentially worse. It's likely to remain this bad for 2-3 months minimum.
Meaning, the costs could be astronomical, and as you pointed out, would DESTROY people not covered by insurance. This could honestly be almost as bad as the Subprime housing crisis. Something like 800k people filed bankruptcy from Subprime. Conservatively, we're likely to see 500k semi-severe hospitalizations. If 30% of them are unemployed, I don't know how that doesn't lead to 150k bankruptcies.
YMMV, but I would say that's on the conservative side.
Better mobility and ability to create and destroy has costs and benefits.
The implied "why" would be a more fluid workforce. We've all heard the horror stories of companies/industries/nations paralyzed by an unmotivated/unproductive workforce. Hell, we have the same jokes here about jobs in some government agencies and big corporations.
The thought is "quick to hire, quick to fire".
I don't mind it; I just think the situation where you lose your job AND your health care is insane.
I'd like a stronger social safety net.
On the other hand, perhaps countries with a stronger social safety net make it harder for companies to fire, so they push the burden back on the companies to keep from stressing social services.
"At-will employment" might be a US legal concept, but it's everywhere in Asia.
A few first-world economies (like Singapore, where I'm at; perhaps Hong Kong too) have similar (or less) employment protection to keep their reputations as "business-friendly" countries.
Layoffs being permanent job losses.
Furloughs expecting to go back to work when the social restrictions are lifted.
A lot of these are people taking advantage of state unemployment insurance, but who expect to return to work in the next few months.
It's also unclear, once things open up again, whether people will spend like they used to or whether the loss of potential customers' paychecks will add to the pain of small businesses.
I'm also curious how much it really helps health (and maybe even financial health) overall. Real home cooking is good compared to burgers and fries. But frozen pizzas are not great compared with some healthier restaurant options. And some restaurant food is pretty cheap and some packaged food surprisingly expensive.