US weekly jobless claims jump by 6.6M | Hacker News Reader

US weekly jobless claims jump by 6.6M

cnbc.com

56 pointsitronitron131 comments

The Fed conveniently released an announcement about a new $2.3t free money program at the same time. The Fed's actions only serve to confirm what I think a lot of people already know: things are going to get really bad.

It's a bit strange watching the stock market continue to pump knowing many of these companies have had their revenues drop by as much as 100%.

On the other hand, hasn't a lot of cash outflow been reduced right now too?

I feel like we're putting the economy on pause. If we can survive in this state for another 3 or so months, there's a good chance things will quickly return to normal - or at least most companies will survive and start rehiring under a new normal.

Black Swan, 1:100 year event. It makes a lot of sense to spend the kind of money that you'd collect over two years of tax collection in order to support people through this. You can then recover that money over about the next 50 years.

I think Australia is trying to do this on the cheap and kinda of stuffing it up. We're going to see a lot of industries collapse. Tourism is dead for 36 months at least and so is the higher education sector. It's going to be bleak.

There’s a good chance things will return quickly to normal? Where’d you get that from?

"there's a good chance things will quickly return to normal - or at least most companies will survive and start rehiring under a new normal." Other than optimism and hope, what is your basis here?

what's happening is the result of a medical emergency and not the economy. There's no financial reason or economic reason the job losses are so high. It's still there, the demand is still there, we artificially halted the economy and that generated the job loss. It's certainly not an on/off situation but the job demand is still there and we can get back to work.

This concept of an economy as some sort of Platonic ideal, disconnected from the processes of the polity in which it exists, is very odd to me.

It seems like having your heart stop and saying it isn't a "real" emergency, because the organs are all still there and ready to get back to work as soon as oxygenated blood starts arriving again. Sure, that's true for a minute or so, maybe two if you're young and healthy. After that...

For those who have completely surrendered to 'the economy', mostly neoliberal/laissez-faire, this is par for the course.

well take the analogy further, in this case to save the patient's life you have to stop the heart from beating for a time but that doesn't imply the patient has suffered a heart attack.

In that case, the analogy is to open-heart surgery, which typically results in significantly reduced capacity for a long time at best, and often permanently. It's certainly not something you bounce back from quickly or easily, and even if you're young and in perfect physical health, you have to be pretty lucky to come back all the way.

Staying within the increasingly strained analogy, I don't think it is reasonable to describe the US economy as "young" or "in perfect physical health", or indeed even as anywhere close to either of those. This is more like doing an emergency sextuple bypass on an obese 70-year-old with a lifelong pack-a-day habit - even if the patient comes off the table alive, it's going to take a long and careful period of physical therapy and recovery to keep him that way, and he's almost certainly never going to recover all of even the limited capacity he had before the crisis.

Just because the cause of a crisis wasn’t financial, doesn’t mean that it doesn’t trigger a financial crisis. Financial systems are not impervious to medical disasters just because they aren’t financial in nature.

> the demand is still there

Right. Common belief in 1930-1931, too.

Psychology is malleable, and consumption patterns beyond food and shelter are driven largely by psychology. In the great depression, consumption behavior of an entire generation was permanently changed, no matter how much better the economy got. Those mental scars lasted forever.

What percentage of the population will watch a parent, spouse, best friend, or grandparent slowly asphyxiate to death and develop a lifetime aversion to casual dining, tourism, mall shopping, non-business air travel, fast food, staying in hotels, visiting family for holidays, casino gambling, meeting with potential clients, going to class, etc?

And then what are the second order effects of not needing the suits/ties/dresses, jetliner inventory, commercial real estate, gasoline, cruise ships, university buildings, casinos, etc required for the above activities?

Which of the economic sectors predicated on those activities will "bounce back"? What is the current high-yield debt load associated with these sectors?

well, we can argue but in 6-8 months we'll know for sure.

Or the Great War, famines in Europe and 1918 flu pandemic? Which was followed by the roaring 20's. As to what % of the population will watched a loved one die and then retrench psychologically for an extended period of time? IMO, a very very small percentage. History has seen people suffer much much MUCH worse loss and then bounce back with a vengeance shortly afterwards.

People and societies are not as fragile as many people seem to imagine today. People and societies are, in fact, quite resilient. They can withstand the horrors of war, plague, famine and more. And then bounce back rapidly within a few years. I'm not trying to minimize the sorrow or severity of those that suffer from this pandemic. But relative to past mass trauma, there is little to suggest it's a major turning point in global culture.

In fairness to the poster, this is the refrain you’d hear from many CNBC hosts all day, political appointees, etc. I’m old enough to remember the same positivity as the financial crisis unfolded, so I try to remind myself that public officials have no incentive to tell the public “the economy is going to be fubar till 2020. Hang on folks.”

In 'fairness' to the poster, if they're relying on CNBC for their perspective, they're idiots unless they're really young and haven't been burned before by the mainstream media's reporting.

Getting an economy back on track is somewhat of a chicken-and-egg problem: consumers need jobs to obtain income, but companies need sales from said consumers to generate profits, some of which in turn fund jobs.

If the economy were to just magically turn back on at its prior capacity whenever this all ends, so many consumer-facing business would die because it's going to take years for everyone who had jobs to get them back.

There's so much optimism around a quick recovery, but we've also gotten really bad at using poor KPIs (like the stock market) to judge economic performance. It's important to remember that such a quick recovery has never happened in history, and sure, technology will likely speed it up some, but it'll also hide and obscure many details because the BLS system is inherently antiquated.

"There's so much optimism around a quick recovery, but we've also gotten really bad at using poor KPIs (like the stock market) to judge economic performance." = fully agreed, and further wondering: what KPIs would you use?

I believe the way we collect data around the economy needs to be completely rethought. It's clear that the gig economy model is the future for many workers, but it's proliferated in a way that absolves companies of financial responsibility and has created massive inequality that our current system isn't able to effectively address.

We have to rethink the way we define and calculate employment, underemployment, and unemployment to more realistically align with how the labor market works today. It would be a very ambitious effort, no doubt.

I recall a time many moons ago when I was doing some research on the way in which my state determined their own employment/economic statistics.

It was quite an eye opening experience and exploration. State level economists/demographers are using totally obsolete methods, worse was they they didn't want to disclose certain key elements short of a DPA (state equivalent to FOI) which further led to believe that their archaic approach may be intentionally misleading because "look at how great our unemployment rate is" ;)

I can't speak to fed stuff, never dug in to deep. Totally agree with what you are saying and wondering what (trusted) existing KPIs out there would make sense to look at as say a subcategory of unemployment, if it gets any more granular?

Ultimately, the most hopeful future I see is one where all levels of government, from municipalities all the way up to the federal government report out raw data as close to real-time as possible so that academic institutions, non-profits, etc., can do data science for the public, so to speak.

Here's what looks like some new weekly research made public re. res rental payment: https://www.nmhc.org/research-insight/nmhc-rent-payment-trac...

At least in tech, there have been waves upon waves of layoffs the last two weeks. Those jobs won’t instantly come back, even when the economy recovers.

Beyond tech, many small business will never reopen. Their suppliers will now be over staffed, and need to lay-off. The suppliers of their suppliers will see a reduction in their order volume, and will do layoffs. Etc, etc.

I’m not an economist, but it doesn’t take an economist to see that even if we had a vaccine every human being could get today, that there would still be a permanent jump in unemployment that will take time to recover from.

Given there is no vaccine in the near future, the hope turns to NPIs or therapeutics. NPIs will continue to suppress the economy because many service workers won’t be able to resume their jobs, even as some people go back to work. Cruises won’t be back. Amusement parks won’t reopen. Stadiums will still be shut. Flights will still run mostly empty. Ubers will be avoided.

So, the hope turns to therapeutics. Hopefully some drug cocktail can reduce the severity of symptoms so fewer people enter catastrophic distress. And/or, we discover some other way to treat those in the ICU to further lower the death rate. If we can lower the death rate to actually be the same as a bad flu season, maybe enough people will have confidence to resume their normal lives.

For now, I don’t personally foresee a V shaped recovery. I’m not sure I buy a U shaped recovery either. But, I’m not an economist, so I shouldn’t be taken as anything other than a random internet person sharing their opinion.

Honestly, I put more faith in a random internet person sharing their opinion on HN using a bit of logic, reason and current reality than I would someone who actually considered themselves to be an "economist" (which btw fully deserves air quotes whenever saying outloud).

I’m somewhat certain that viewpoint isn’t entirely original to the fifteen people posting it in this thread, but is fairly common among actual economists and has come to prominence precisely because there are still quite a few serious publishers recognizing expertise and connecting it to the public.

It’s the professional media personalities impersonating economists based on their 30-year old mail-order PhDs that give the profession a bad name. Someone giving stock tips on their daily talk radio program is not an economist, almost by definition (the efficient market hypothesis is usually taught in the first semester)

I don't think three months is right though. We need to wait at bare minimum until contagion goes back down to the level it was when we shut the economy down. Even if we say that's three months off, we'll just have to shut it back down again shortly after. Then cases will go way back up the way they currently are and we'll wait another few months until they go back down. A number of cycles of this until we hit herd immunity, which, if we say 1% of population catch it each cycle, that's quite a number of multi-month cycles.

> things are going to get really bad.

Yes, they will. Just look at countries like Italy, Spain, etc. It will proportionally be the same in the USA, or any other big country. Whoever was smart enough to look at the first affected/infected countries and react quickly will probably be a bit ahead of others, but sooner or later, with the way our global economy works, the lockdown will crush a lot of jobs, and it doesn't matter how much money you have left in your bank (as a country). The only way is to reintroduce people into work slowly, and in order to do so we need to understand who can go out and who can't. Of course, the vaccine would solve a lot of troubles, but who knows when.

Is the stock market connected to reality anymore? 16 million Americans lost their jobs in three weeks and in that time there's been a substantial rally.

This can't just be short covering. What gives?

The Fed has promised to basically prop up the market for however long it takes.

It's speculation I guess. People just assuming there will be a bounce back up and then other people jumping on to make money.

So in a way, yes it is disconnected from reality.

The stocks did go crazy low though on 18th March. Tesla pretty much halved its value.

Tesla had roughly quadrupled in a couple of months prior, though.

Based also (mostly) on speculation

Stock market is volatile probably due to many factors, with HFT probably playing a significant role.

That said, a jump in unemployment claims today is likely a non-event for stocks: it was predictable and as such already priced into the market. Markets are driven more by expectations 6+ months from now, for which you get the full spectrum of "90% become poor for many years" to "pumping more cash in, use inflation to deflate debts and go back to business as before". I suspect we will get something in the middle, but its just a wild guess. My 2c.

>Markets are driven more by expectations 6+ months from now

If this was the case then we wouldn't have since the crash due to Covid-19.

during the market crashes we weren't we looking at 100-240k dead in the coming months and that was considered "good"?

My point is that people claim that the market has already priced in the next 6 months. This is not true.

Next 6 months includes a lot of uncertainty in expectations which is, statistically, priced in. Those expectations may have a distribution which might make for a strange average response.

For example, consider a bimodal distribution: 50% +1, 50% -1. The average is zero, but everyone that believes in this distribution believes that zero is highly unlikely. Thus, if there are big benefit for guessing right and little for guessing zero, the actions can rapidly oscillate, seemingly without major external information (just based on whichever of two almost-equally-likely outcomes seems likelier).

Statistically priced in? Huh? I doubt that.

I think we’ve known for a while that the stock market is not the economy. My two cents:

1) Uncertainty is anathema to markets. At the beginning of the crisis, there was a ton of uncertainty about how the disease would progress, what it’s impact on supply chains would be globally, and how governments would respond. In the last few weeks, the US has gotten a lot more information on how things progress, “flatten the curve strategies” are appearing to work (which reduces uncertainty), supply chains are still very strong and, for staple goods/services, only minority affected, and the central banks of the world are issuing a MASSIVE amount of short term liquidity to prevent credit crunches.

2) (this is a bit more cynical). I suspect the productivity of a huge number of Americans, particularly in service roles, has disproportionately less impact on the economic productivity of publicly traded companies. In other words, many jobs are disposable without impacting the financial health of companies in the stock market. Small businesses are being gutted, and so is a lot of big retail, but it’s been too short of a time for those effects to make a dent in how many of the publicly traded businesses are operating.

I agree with your comment, but I'll add that pessimistically, I feel that for reality these 'service roles' might end up having a much larger impact that we expect, and the discrepancy will have untold, unexpected consequences. A crisis like this one might make us realize what truly matters. It also might not, which at this point I'm half-expecting.

I suspect they might be happy with the $USD 500 Billion headed their way as part of the COVID-19 coronavirus stimulus bill.

So if things get really bad, since the government has bailed them out once, I suspect they might be thinking there'll be more where that came from.

> Is the stock market connected to reality anymore?

No, it's a silly game to make traders richer and everybody else poorer.

Don't forget that generally close to half of traders also lose money.

we’ve now lost 10% of workforce in three weeks

I’m a little surprised it’s not higher.

I assumed with bars, gyms, retail, house cleaners (and not to mention wait staff at restaurants) all out of a job indefinitely that those folks made up >10% of the workforce.

It's possible that what we've found is that we can only intake around 7 million jobless claims per week. The number could be much higher, we just don't have the bandwidth to receive all the claims, so they continue to pile up.

I think it will continue to raise is seems like we can only handle processing about 6.6 millions unemployment claims a week. There was a similar number last week. I know we saw it increase quickly, but that does not mean we will see it decrease quickly.

Bingo. During Chernobyl nuclear disaster initial official radiation reports were based on the highest number of the fielded portable measurement equipment.

It is definitely much higher. Many states' unemployment systems are woefully inadequate.

Florida (but probably other states too) intentionally made the unemployment claims system painful/impossible to navigate:

>“It wasn’t about saving money. It was about making it harder for people to get benefits or keep benefits so that the unemployment numbers were low to give the governor something to brag about.”

https://www.politico.com/states/florida/story/2020/04/03/its...

Maybe Floridians should vote in their best interest then..

Floridians are trying.

https://en.wikipedia.org/wiki/2018_Florida_Amendment_4

The legislature and Governor took a look at the 65% vote and went "nah", though, and put a bunch of new obstacles in place to override the voters.

Not like Florida Republicans are the only offenders there. 59% voted in favor of California's "let's check if people are illegal immigrants" amendment back in 1994 [0], but then the incoming Democratic governor refused to defend it in court. (Sure, it may have actually been unconstitutional, but considering it's basically the opposite of 'sanctuary cities'...)

Denying the public the benefit of politically inconvenient propositions is a long tradition in the US.

0: https://en.wikipedia.org/wiki/1994_California_Proposition_18...

> California's "let's check if people are illegal immigrants" amendment

That's a really disingenuous description of an amendment intended to "prohibit undocumented immigrants from using non-emergency health care, public education, and other services".

> Sure, it may have actually been unconstitutional...

It's funny that this is waved away as a minor issue, as if it weren't a giant difference between the two situations you're trying to draw a comparison between.

I mean, that's a better description than calling it "Save Our State"... but yes, the goal of the amendment was to reduce the services provided to illegal immigrants. Perhaps I should have said "let's check if people are illegal immigrants before providing non-emergency services", but too late to edit now. Whether this is a good idea is very much in question, but that's also the case for letting felons vote.

The "might have been unconstitutional" was a "no, this genuinely might have passed muster in the courts if it was actually defended". What actually happened was that an injunction was placed against implementation of the proposition, and the state never appealed. Probably worth noting that the logic used in the injunction - that it was unconstitutional on the basis that it infringed on the federal government's exclusive jurisdiction over matters relating to immigration - would also (IMO) prevent sanctuary cities from existing, except that inaction is generally (and correctly) privileged above action.

You should look at how these clinics are funded.

Clinics?

From what I'm seeing on Reddit, the system in Chicago is also simply overloaded - they can't process claims fast enough to handle the spike, so people have to keep trying.

~6.6m might just be as fast as we can process per week.

I have more than a few friends trying (and failing) to register for unemployment claims because the websites are jammed up.

It is not higher because the UI filings systems are still not capable of processing the volume of new claims.

Is the number expected to be this high? I thought one of the core ideas of the stimulus was to prevent firing by giving small businesses a "free" loan if they retained their employees?

I've been trying to find a good authority on the economics of this stimulus but it seems I am always stuck finding the same "rehashed" news articles.

Stimulus takes a long time to "trickle down"

Part of the stimulus is ensuring that unemployed people will get enough cash to live by. They increased the allowance by 600USD per week.

That's really not that much. Won't pay for a 1 bedroom apartment in San Francisco, especially after gas and groceries.

True even while gas is almost zero because not driving.

Unemployment in FL maxes out at $275/week. Digest on that for a while.

Maybe SF is not a tenable place to live anymore for ___%?

Maybe they will be inconvenienced by forced relocation?

Maybe no-one is entitled to continue living today the way they did yesterday?

Maybe some people can neither afford to move nor live in their apartment and will end up homeless. The people having the hardest time living in SF are the people we now call "essential workers" and "heroes" for doing the jobs we all depend on to survive. What exactly do you think happens to the city of San Francisco when all the "essential workers" are forced to move away or are homeless?

"What exactly do you think happens to the city of San Francisco when all the "essential workers" are forced to move away or are homeless?" It implodes!?

I don’t think any states are paying that extra 600/week out yet, where I’m at they are still recoding for it and expecting several more weeks. It’ll be back dated but still, and with the numbers of claims I’m wondering how much capital they really have for it.

Questions I can’t find answers to:

How does this actually work? Do the states manage the extra 600? Will it just appear one day for people on unemployment?

What if your state has stricter unemployment rules than the stimulus bill? You’d be eligible for the 600 but not able to get it?

The core ideas were reported upon, the real purpose is to bail out the banks (once again) and the fortune 500 companies. Very little is going to the people hardest hit.

This is false, the plan specifically targeted small businesses: https://www.sba.gov/page/coronavirus-covid-19-small-business...

You mean the money being managed by the person Trump just fired?

Here, would you like proof?

https://www.latimes.com/world-nation/story/2020-04-07/trump-...

The plan is a death spiral financing which puts a small business into a worse position after taking it than before. They have no revenue due to a government action, loan is based on the value of their payroll with the revenue and the the small business is required to spend 75% of the loan for payroll while being closed.

The fact that banks claimed that 0.5% interest is not enough for them to make it worth it so the Treasury bumped the number and cut repayment schedule is the clearest demonstration yet that it is another hand out to banks.

isn't the loan forgiven if it's spent on payroll during the shelter-in-place orders?

Only the part that went into the payroll. So a business owner with no revenue borrowed money he did not need and got saddled with the payments.

Oh, and as the vast majority of the loans it is personally guaranteed.

Compare this with:

Don't get the loan. Shut it down. Not owe more money than the owner would owe already.

"Only the part that went into the payroll"

why else would you ask for the loan? the whole point is to keep employees on the payroll while they're under shelter-in-place orders.

Because while payroll is a cost it is not the only cost that a business that no longer has any revenue needs to cover. The maximum amount of a loan is 2.5 times the verified payroll. That's 2.5 months of pay. The rest of costs still need to be paid, except there's zero guarantees that the revenue of a business is going to recover immediately after the stay at home is lifted [it won't immediately recover] and it is unknown when the stay at home would be lifted. Lets presume that all other costs of running a business are added to some other loan. That loan is not 0% and it is personally guaranteed.

This means that by taking this loan and spending it on a payroll for next 2.5 months, the owner of the business in a month number 3 is in a worse position than the owner of the business would have been today if the owner were to simply lay off everyone.

The only winners in this are banks making a percentage of a zero risk loan that can be serviced at an incremental cost of a couple of dollars (electronic payments). It is, frankly, disgusting that the congress yet another time took small business loans as a base and made it a money stream for banks.

> This means that by taking this loan and spending it on a payroll for next 2.5 months, the owner of the business in a month number 3 is in a worse position than the owner of the business would have been today if the owner were to simply lay off everyone.

How is that true? The loan is forgiven if it is used to pay employees. Yes there are other costs, but assuming a business doesn't want to just close up shop entirely, keeping their employees would be preferable to losing all employees and their entire business.

The revenue for these businesses cratered. It cratered due to government actions. For service businesses or businesses that sell to service businesses the revenue is zero or nearly zero. The reason why the businesses needed X employees before is because to support Y revenue pre-closure X-1 employees were not enough. In order for the the payroll portion of a loan to become a grant a business cannot decrease the number of workers even though it has no revenue to support them. Reductions in payroll costs reduce the forgiven part of the loan. Reduction in a headcount reduces the forgiven part of the loan.

Essentially, in order for a loan to be treated as a business makes the following bet:

"In no more than 2.5 months from the moment the loan is funded the revenue will return to pre-closure levels"

The non-grant part of the loan (or entire loan if it no longer qualifies) must be repaid in 2 years at 1% APR.[0]

The only real play for a small business that is planning on being around for a long time is to get the loan based on the top payroll number, immediately lay everyone off taking 1% APR hit and repay outstanding loans with higher APR. This is only applicable to businesses that have a lot of cash in a bank.

[0] Before Wells Frago/BOA/Chase etc complained to Treasury that they were not going to make enough money to "make it worth for them to do these loans" the repayment terms were 0.5% APR for 10 years.

Bank bailouts don't work without oversight.

https://www.forbes.com/sites/mikecollins/2015/07/14/the-big-...

Banks really aren’t the focus this time around: the changes since 2008 were quite effective in bringing down risks. The bank-specific measures now aren’t aimed at stabilizing them, but at using them to, for example, use their existing personal knowledge of smaller businesses to direct funding.

Nor would I worry too much about Fortune 500 companies. Their scale makes any graft less meaningful, in relative terms. And since most support seems to be in the form of loans, it’s likely that most of it will be recovered. Boeing just isn’t going to go bankrupt.

The current administration seems to be filled with a specific sort of serial fraudopreneur. Like Saul Goodman, gut without the humor and remnants of decency. With oversight already gutted, I’d expect recently-founded LLCs with beneficiaries that just happen to be endangered-wildlife-shooting-buddies of anyone with a secret service pin the main artery of funneling money. I other as loans quickly spent before the company folds. Or, more directly, by being middlemen suddenly required to do business with the government, earning a 400% markup.

Remember that 3-person electrician outfit from the Interior Secretary’s home town in Montana that somehow got a no-bid contract to rebuild Puerto Rico’s entire grid after the hurricane? That’s this admin’s world.

Yes. This is part of the United State's Main Street Lending Program, called the Paycheck Protection Program (PPP). The federal government is guaranteeing loans made by private banks. This is taking time to work its way thorough the banks, as they try to understand their long-term legal obligations.

In the mean time, some businesses are laying off or furloughing their employees so that their employees can get some money by claiming for unemployment benefits. Unemployment systems are established and somewhat functioning, unlike the loans, which probably need another week or two to start having an impact. Presumably, some of the workers will be recalled once loans are established.

Edit: Removed redundant word.

"Presumably, some of the workers will be recalled when once loans are established." So what happens if you are kept or rehired by your company under the PPP - but don't have any actual work to do?

The "free" loan is reportedly difficult to get since the government leaned on banks to provide these and banks are doing whatever they can to avoid the situation. For instance, Wells Fargo says they are out of those loans and Bank of America tried to make these loans dependent on already having another loan with them (policy revoked after outcry).

Small businesses in our town are laying everyone off instead of waiting on these loans b/c the employees can qualify and receive unemployment immediately now. Once things open again, they plan to rehire the same people if possible.

All this is anecdotal but seems to me that new unemployment rules are part of the rescue package (I don't really consider it a stimulus package)

Assume you are small business. Now try to find where / how / when You will get stimulus money? To cover what?

I sure can’t.

It's literally the gov just giving out money so these companies can keep the doors open and lights on under the guise of 'being in business'. The point is more of a psychological one - to create impression that things are going ok (or not as bad as it seems) at scale across the country.

That's the theory, but in practice it's turning out harder than expected to acquire said money. The government isn't just "giving it out" in the sense you can just walk up to a bank and leave with a bag of cash. You have to apply for it and then be approved and then wait for it to show up. This process takes time, and it's not clear how much time.

Another poster noted that Wells Fargo was capped at what they can distribute and BOA was refusing loans to people who were not already customers. So if you're a small business with Wells Fargo and get denied there after an unknown period of time it takes to process that application, then you turn to another large bank and get denied there, this is time wasted while a clock is ticking (rent is still due for your employees and yourself at the end of the month).

So what do you do? Do you lay off your employees because they can apply for unemployment right away? Or do you hold out and hope that the third bank you apply to for a loan will be a success? What if it's not?

It's very easy for Congress to say "We are giving out money. The businesses are saved!" It's quite another in the implementation of that, and to some degree I feel they were so eager to pass something that they didn't think these things through fully.

"So what do you do? Do you lay off your employees because they can apply for unemployment right away? Or do you hold out and hope that the third bank you apply to for a loan will be a success? What if it's not?"

That's a case by case judgement call that only the owners/operators can answer given their situations and values. There is not universal or general advice answer here.

"It's very easy for Congress to say "We are giving out money. The businesses are saved!" It's quite another in the implementation of that, and to some degree I feel they were so eager to pass something that they didn't think these things through fully."

I fully agree and my comment above was to suggest their intent.

"Is the number expected to be this high?" = Yes, some models/estimates suggest it will reach 30m, though I don't recall the horizon.

"I thought one of the core ideas of the stimulus was to prevent firing by giving small businesses a "free" loan if they retained their employees?" = In some cases, I'm hearing that it is happening. In others, the funds are not flowing so owner/operators are proceeding to 'let go'.

"I've been trying to find a good authority on the economics of this stimulus" = Understandable, but difficult enough during 'normal' conditions. Now, everyone becomes an expert.

A lot of SMBs are having issues actually getting the money. One example: Wells Fargo is only authorized to distribute $10B of the money from PPP because of their scandal a few years back. Many SMBs use Wells Fargo for their business checking accounts. This has created a massive delay queue with folks having to reapply for assistance several times to no avail.

And yet, stocks continue their quick rebound.

The virus will peak soon, quarantine will start easing, and the economy will start to resume.

Why / how will the virus peak soon?

Global population is ~7.8 billion and yet presumably only 10-100s of millions have caught it so far.

At the rough 33% increase rate the virus is showing, 10 million is 20 in three days. 40 in 6. 80 in 9. 160 in 12.

Social distancing is slowing that down a bit, but I suspect in the coming week or two we'll learn it's been spreading like wildfire in places like Florida and Alabama where they've been slow to clamp down on social activity.

Exponential growth can be hard to wrap heads around. That said, I think "peak" is a misnomer. We'll have a bunch of peaks.

Definitely cyclical...and so will the economy which will make any economic recovery more drawn out and difficult as we experience more ups and downs in day to day life.

Plus now we'll have a bunch of companies on the dole who otherwise wouldn't be in business/re-open and it will become even more surreal when the market can't sort out which companies are existing naturally and which ones are fully propped up (esp. if there is no oversight = impossible to track).

Also, we're not even testing for it broadly enough to really know how many cases we have. Current numbers in the USA are a rough educated guess.

I am afraid the big hit will come in the second wave, when we get used to the numbers, get cabin fever, things start opening up and say 0.1% of people still have it, versus the one in a million that had it when things started shutting down.

When the contagion is out in 0.1%, and we reopen everything, suddenly 50% of people will have it in a month and that will be unlike anything we've seen yet.

"I am afraid the big hit will come in the second wave" Quite possible, yes, but do not live in fear, friend. This is a great time to eradicate fear and embrace the chaos :)

Now we're asking the real questions! But what facet of Chaos are we to embrace? The undivided power of it? Or to pray to one of the gods and seek their favor? Grandfather Nurgle may be good now, but in 6 months the skull throne may need skulls. Slaneesh seems to have been usurped recently.

Was this intended as a response to something else?

https://warhammerfantasy.fandom.com/wiki/Chaos

We're already starting to see massive layoffs at startups. Maybe it was possible that every restaurant could just rehire their unemployed staff (extremely unlikely), but once salaried employees are let go it's a long time before companies start rehiring.

Even if covid-19 disappeared today in some impossible miracle, we'd still see record people out of work and it would take years to fully recover.

The "startup" phase of private industry has flourished by unprecedented amounts of VC over the past 5+ years. VC, in turn, has been backed by record PE levels and exits.

Does anyone think these $ highs are coming back in the next 2-3 years, minimum, maybe 5+ ?

Full circle, startup capitalization has peaked

Why would we open the economy at "peak"? We need to wait at bare minimum until contagion goes back down below the level it was when we shut the economy down. That's a couple months off I'd imagine, and even then we'll just have to shut it back down again shortly after, once the contagion gets back up to the level where we shut the economy down initially.

False bottom?

Dead cat bounce

Just wait until earnings come out, then we'll probably see a correction. A lot of this is probably driven by institutional rebalancing into broad market indexes, which pulls everything up.

LOL, what did you expect? Bernie dropped out, unemployment numbers are up, Trump fired the person responsible for managing the 2 trillion Coronavirus bailout. This is a great time for business, not so much for people.

If no one has any money to buy anything, that is bad for business.

They can always just print more.

On the contrary: some business focus on luxury markets, other force people to buy on credit and then demand interest.

Perhaps they've gotten rid of the bottleneck in capitalism: customers. If the government will pay instead, it's much easier to start afloat. No product required!

So sad but true.

It's a tug of war between two camps:

1. The virus has peaked, we'll start to see global economies open up again, everything will be back to normal soon

2. There will continue to be lots of peaks all around the world for months/years to come, the economy will not resume like it was before, for many years.

Personally I think things will be stagnating for a while until we get a therapeutic or a vaccine.

Is this much job loss happening elsewhere, like Europe?

Yes. Spain lost about 10% of its workforce in March. Italy is expected to go from projected 0.5% GDP growth to -3% (or even up to -10% by some projections). I saw one estimate that 60% of Italy’s manufacturing plant was shut down by COVID.

So how can reality be determined when employment has become such a facade?

Here it's mostly "partial layoffs". Basically you're still employed and can be asked to work at any time (e.g. 40% on Monday, 0 until Friday and 10% on Friday). When not working, 80% of the salary is paid by then unemployment office.

As far as I know, it means you cannot do another job instead, you're still on payroll. Though individual employer might show goodwill.

As a result, "real" unemployment has barely increased, but about 1/3 of the workforce is on some kind of reduced hours (or their company has signed up for the scheme, though not necessarily reduced hours yet, it's not clear to me).

According to my calculation, minimum wage employees can now get twice in unemployment benefits (for at least 4 months) than his/her original wage.

So based on that, even if the economy is open, I failed to see what would incentivize people to return to work.

Unemployment insurance payout per month is usually capped based on what you made at the job you had before you went on it. One assumes that will again be the case once the current crisis is considered to have ended.

Unemployment insurance payouts are also time-bound. You don't go on unemployment and stay on it indefinitely; after a few months, barring a rare and hard-to-obtain extension, the benefit ends.

Agree. So I assume that most of the unemployment is in the travel/hospitality/restaurants/retail (etc).

Hence, even after the economy is open, it would be hard to get those people back to work until the "enhanced" benefits run out.

I.e. I expect to see a lot of restaurants/hotels open but with no employees. Or, they will be employees, but their wages will have to be increased by 50%, which would cause runaway inflation.

If this happens, this might lead to spike in automation (AI).

The industries you mention are unlikely to be amendable to increased automation. That’s why service jobs have grown over the last decade or so, compared with manufacturing.

And paying supermarket cashiers decent wages isn’t going to create inflation because it doesn’t change the total amount of money in circulation. Productivity will just be redirected from building super yachts to poorer children’s school supplies (cliches for added clarity).

"One assumes that will again be the case once the current crisis is considered to have ended." Let one not assume?

It wouldn't be the worst idea, which is why I'm not optimistic that it will play out that way. At best, given that states administer unemployment insurance, I would expect to see a patchwork, with many of the states where it's most needed refusing to implement it.

it’d be quite stupid to give up your job in this “economy” for a benefit limited to 4 months.

Beyond that, it just shows that minimum wage is nowhere close to covering basic necessities, especially for families.

Even if the mechanism you fear does start happening, the result would be that employers would (finally) have to raise wages. Win-Win!

" it’d be quite stupid to give up your job in this “economy” for a benefit limited to 4 months." I think you are over estimating the masses...and under estimating the duration of the welfare.

"...I failed to see what would incentivize people to return to work." If and as long as this maintains, they will not be. And from there, they will have re-adjusted to getting paid just as much (perhaps more) than they did before while now doing next to nothing.

And that will bare a most interesting crossroads in America - finally and fully stripped of its collective values, work ethics and self reliance. Godspeed.

And yet the stock market goes higher...

This is terrifying

Doesn't matter since Jerome Powell nationalized the stock market and is just printing money to inflate it. It's all priced in.

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