April Unemployment Rate Rose to a Record 14.7% | Hacker News Reader

April Unemployment Rate Rose to a Record 14.7%

wsj.com

230 pointsericmay240 comments

My prediction is we hit (or in reality, have already hit) 48 million unemployed (~30%) in the U.S.

It’s just many aren’t filing for unemployment because they can’t get through OR they decided not to apply (due to receiving stimulus / severance).

Full predictions / data here:

https://austingwalters.com/covid-19-u-s-fatalities-economic-...

The gist is that retailers are going bankrupt (see J. Crew & Neiman Marcus) and places like Macy’s are furloughing most of the staff. Airlines are similarly hit, and I can go on (it’s linked above). If retail and hospitality (and similar sectors) shrink by 80% for 6 months that’s a massive number of unemployed - 33 million.

Further, recruiting and marketing has cut staff at most non-FAANG places (see Uber, Lyft, AirBnB, etc), This will start to impact the tech industry. Banking is going to see massive defaults in the next 3-6 months... the list goes on.

Easy to see unemployment hitting 30% in the next 2 months.

Do you think this will be their downfall in the long run?

Who are "they"?

It's not good for the now unemployed people but hopefully they'll get back on their feet!

Thanks for sharing this analysis.

> It’s just many aren’t filing for unemployment because they can’t get through OR they decided not to apply (due to receiving stimulus / severance).

The BLS numbers have nothing to do with unemployment filings. They base their unemployment numbers off two surveys: https://www.bls.gov/news.release/empsit.tn.htm

People not looking could skew the numbers, but since the vast majority of the job losses in the report are considered temporary layoffs, and since the BLS always counts temporarily laid off people as "unemployed" regardless of other criteria, I don't expect it to be a significant factor.

I was once one of these panelists. As one, I represented 0000’s of other people via their extrapolation. While my experiences at the time (2009) were common, they did not represent that of many of my fellow unemployed colleagues and friends. In other words: these surveys are guesses. Nothing more... take them as estimates only and know that the truth is always different.

Is there a better alternative? I understand your criticism, but this is not a dataset that can be reasonably obtained in its entirety, so sampling is basically required.

Their methods have been largely consistent over the years, so even if it isn't complete, it's easy to compare to historical trends, which is more important in this context.

Interesting that you feel this data isn’t available on a per case basis... it’s even more interesting that I end up with downvotes foe sharing my actual experiences. HN is tone deaf. Most of you folks work in modern tech! Modern in the sense that your company and job are likely based on big data... ugggh

....what they're saying is that there's no feasible way of getting an exact count for unemployment and you have to use some extrapolation.

I think you got downvoted for dismissing the whole concept of random sampling.

In a random survey you're not representing your friends. They will presumably be represented by randomly picking someone who happens to be more like them. (Also unumployed.)

I didn’t dismiss anything of the sort, that’s what’s funny. I shared my actual experience of being chosen as a panelist and have a vastly different outcome and outlook than many of my friends.

It’s not an uncommon assertion that the Fed data is not accurate. Number 1 it’s political. And perhaps more importantly, it’s designed to obfuscate the individual and that, while statistically accurate for static data is anything but for this type of situation. People and specific employment issues are anything but static...

You literally said it's just a guess. It's not. It's a scientific method of estimation which has known expectations of accuracy, and when done right, has a track-record of being able to provide reasonable approximations. Saying it's 'just a guess' implies something very different for which you are rightly downvoted.

Second, explaining the basics of random sampling by saying what applies to you, did not happen to apply to your friends/family, implies you have no understanding of the concept of random sampling either. There is absolutely no requirement for your situation to be the same as your friends/family to make this method useful, but by posting it as an argument, you imply that this does matter. For this, your post is also rightly downvoted.

As for 'static data', it's a sample to provide insight in a snapshot in time. It doesn't claim to be anything but static. It does exactly what it sets out to do.

Garbage in, garbage out.... of course the data over time will correct but the anomalies created by a few outliers are in fact a representation of bad practices. And those outliers are not measured because one cannot ever account for every potential situation when it comes to people. So they create a margin.... works for figures but NOT for policy!! My point,by the way. No wonder SV is still chasing ad optimization as it’s primary business. It’s impossible to ever become efficient, but that doesn’t stop people from chasing the paradigm. Because it’s the cracks and crevices that allow for exploitation, that’s why.... oh never mind, I’m talking psychology to people who think in binary and never the two shall twain

People who work in big data understand how statistics, extrapolation and time-series work. You might be more interested in the ADP data, as they use actual payroll data. Their payroll research shows 20.2 million jobs lost [1].

[1] https://adpemploymentreport.com/2020/April/NER/NER-April-202...

The plural of datum is data. If you are trying to correctly estimate a number like 14.7% to within 0.1%, you only need to survey maybe half a million people, making each person "represent" 600 others in your words. If you want it within just 1%, you only need about 5 thousand people, making each person "represent" about sixty thousand others. That doesn't make it any less correct, nor is it "extrapolation" in the usual sense. Closer to interpolation. It's definitely not just a guess.

I never mentioned the figures... I was referencing the panel. These were questions, not facts. I was asked a series of questions related to being unemployed and / or seeking employment. That data was extrapolated to millions of others and presented to the public. It was not accurate. My experiences were not common so their random use of my data meant the report was skewed. Even if only slightly. Math is objective. Words are not.

> these surveys are guesses.

Well yeah, that's what statistics is. What matters is your confidence level. Logistically I can't sample the entire population of a city, let alone a country. Even if I could I can't guarantee that people are answering honestly. Guesses are all you are ever going to get.

They do however have to be seeking employment... many of whom are not at the moment. Figuring it better to wait, collect welfare, then apply when job postings pick up. I know several family members doing this

The risk of re-opening means there will no longer be cover for unemployment benefits. But since the pandemic is still happening, demand won't recover fast enough to put all these people back to work, and the furloughs become permanent layoffs.

>OR they decided not to apply (due to receiving stimulus / severance).

Does receiving either prevent you from getting unemployment? If not, why would you turn down free money?

Severance can definitely delay receiving unemployment. Receiving the $1200 stimulus does not, but receiving the PPP funds through your employer would. The latter consequence is causing some employers to not use that loan/grant.

For myself, I was furloughed March 23, had about a week of paid Vacation that I used up until March 30th. Filed for unemployment on the 31st. My health benefits continued until April 30th at which time I would be laid off.

Employer got PPP and I was un-furloughed on April 27th and they have enough runway for us until June 30th when the PPP runs out. Everyone got a sizable paycut, myself 37%.

I work in corporate events / trade-shows / experiential advertising and this whole industry won't survive.

Workforce participation dropped from 61% in the US to 51%. That means that 10% of the US are no longer working.

That comes out to 33 million people.

10/61 is 16.3% jobless, but there is "only" a 14.7% unemployment rate. Some of the balance is retiring, some are hospitalized.

Is it also not the case that if you're not looking for work, but do not have a job, that you're not counted as unemployed? You're simply not part of the labour force, despite perhaps being willing and able to work in more favourable economic conditions.

This is at least the international labour organisation (ILO) definition.[0]

This is always a bit tricky as it means that when people are discouraged from finding work (e.g. because it is hopeless and they cannot find a job) and stop searching, that they fall outside the unemployment figures. This undervalues true unemployment a bit.

This may help explain some of the discrepancies in the statistics.

[0] https://www.ilo.org/ilostat-files/Documents/description_UR_E...

This discussion comes up almost every time U-3 (official unemployment) is reported.

There's a reason why the USA keeps track of U1, U2, U3, U4, U5, and U6. Because everyone has their own opinion about who, or what, should count as unemployed.

It sounds like the number YOU are looking for is U4, which is U3 + Discouraged Workers.

--------

U3 is reported because U3 has been reported for the past 100 years. If we want to compare today's unemployment with the unemployment in 1930s, we use U3.

https://www.bls.gov/news.release/empsit.t15.htm

True, but at the same time, we cannot say that there is a 49% unemployment rate despite the fact that 49% of the populace are not employed.

With numbers like that, nearly everyone in the states knows someone impacted. The optimist in me hopes to see people demand universal healthcare, social housing, food benefits, and more so that everyone at least has a baseline level of stability.

The pessimist in me believes that this number will be used to prematurely force workers back to work, causing more illness and loss of work for those who choose not to return.

The pandemic is being used by both parties to push their agenda.

Your pessimism is another persons optimistic outcome.

I'm not sure how more disease, death, and long-term health conditions is someone else's optimistic outcome, but it seems to be inevitable.

It’s not that more disease and death is desired by one side, rather there’s political momentum behind not believing that it’s as severe as it’s being reported.

We no longer live in a world with shared truths, and this is the most remarkable manifestation of this new reality.

I'm reminded of the 1932 Pulitzer Prize. It's difficult to report even a very high number of deaths in a saturated disinformation environment.

> the 1932 Pulitzer Prize

Ok, I googled it and I still don't get it... are you talking about the cartoon?

https://www.pulitzer.org/news/statement-walter-duranty

Duranty got the prize for being one of a very small number of Western journalists allowed into Stalin's Soviet Union, and writing about a visit to Ukraine.

He made no mention of the mass famine ongoing at the time, the Holomodor. Wikipedia lists the death toll as "3 to 12 million", because it was a totalitarian state and real measurement was impossible.

So the answer to "is it possible for millions to die and it simply not be reported at the time" is "yes".

Being allowed to return to work or a business you run, being able to pay rent, feed your family, etc.

These are positive outcomes of lockdowns being lifted.

The danger in looking at this as a binary “opening kills people” is that you miss the trade offs and in doing so you miss the other nuanced policy options that sit in between complete lockdown and no lockdown.

It's possible that "looser lockdown with mandatory masks" might work - it seems to have done so in Eastern Europe and some of the South Asian countries. But for some reason that doesn't seem to be on the agenda in the US or UK?

Pandemics, emergencies, and tragedies are usually what gives us the best indication of what our politicians actually want. For some strange reason, it's not usually the will of the people...

The optimistic in me believes that as restrictions are lifted workers will soon find a way to return to work safely and effectively which will stimulate the economy and create demand for more jobs.

The pessimist in me believes that social benefits will incentivize potential workers to stay home and not spend money which will slow down economic recovery.

> social benefits will incentivize potential workers to stay home

What kind of social benefits?

When these workers return to work, will they have customers? Especially for those in travel, hospitality, events, personal services, etc.

Probably. Personal services seem to have rebounded fine in places that allowed them to reopen. The businesses I'm most worried about are small random shops that depend on foot traffic, and restaurants if they aren't allowed to ramp to fuller capacity soon.

Some kinds of travel businesses will of course not be opening in the near future.

The numbers are probably low given the massive backlogs in several states. Look for a few revisions.

The issue isn't the demand. Everyone agrees across the isle that treating every ill would generally be great. The issue is who will pay, how will care be given equally, and how will the level of care be maintained or increase?

You can't just claim your car is now an airplane and drive off a cliff. Nor will just attaching wings grant you the power of flight. You can alter a car into a functioning plane, but what do you have to sacrifice in order to make that work?

> The issue isn't the demand. Everyone agrees across the isle that treating every ill would generally be great. The issue is who will pay, how will care be given equally, and how will the level of care be maintained or increase?

Canada and Germany seem to be managing just fine, and I pick those two examples because they have vastly different health-care systems.

When you cut spare capacity to the bone, sudden demand spikes become a problem.

Raise my taxes by 10-15% (by increasing the tax rate at the upper brackets) and put that money towards taking care of people who aren't employed. Yes, my plans for buying a second home will be delayed, but I think I'd rather live somewhere where everyone was taken care of.

Yeah so that's an option to increase taxes and that does solve how we fund it. We would need to increase taxes more than that, and we probably need to increase middle class taxes to do it. We also would probably have to pay doctors less, which means we'll have created some loan issues. Again, we could pay those, but the money has to come from somewhere, so we'd be taxing the middle class to pay for medical loans for doctors, while also taxing them to pay the doctors.

That doesn't necessarily solve equality of care. Do we pay hospitals equally? Based on patients treated? Based on what is treated? Is getting treated for cancer in Beaumont, Texas the same as being treated for cancer in Cambridge? What about hospitals with poor outcomes - especially if those hospitals mainly serve minority populations?

This is an extremely complicated issue with a lot of side effects and at the end of the day you're going to treat one group or another unfairly to resolve it - and the group that is likely going to get the short end of the stick is the middle class who provides the bulk of tax revenue.

I'm genuinely baffled that one of the big proposals being floated is a payroll tax holiday, which would only really help the still employed folks.

The idea with this is that the employer is holding back money that would otherwise be remitted as tax dollars, IE: helps with employer cash flow. Those funds then become available to pay out as salary. So it’s a rob-Peter-to-pay-Paul scheme to hopefully keep the employer solvent just a little longer and thus keeping those employees from needing to file unemployment.

"Raise my taxes by 10-15% (by increasing the tax rate at the upper brackets) and put that money towards taking care of people who aren't employed."

That might be viable in states like Florida or Nevada.

However, the most populous states have upper bracket state+federal rates that exceed 50% - so that well has already been tapped.

California, as you may know, has identical treatment for simple income and capital gains income, so even that avenue for tax expansion has already been opened up.

> However, the most populous states have upper bracket state+federal rates that exceed 50% - so that well has already been tapped.

Hardly. The top marginal rate peaked at 94% in 1944. It didn't dip below 70% for the next three decades, either - and we still managed to have a golden era. We're hardly tapped out.

I am well aware of the historical tax rates in the United States and welcome any opportunity to point out that those very high marginal rates were put in place specifically to discourage and penalize war profiteering in WW2:

"The crisis of World War II led Congress to pass four excess profits statutes between 1940 and 1943. The 1940 rates ranged from 25 to 50 percent and the 1941 ones from 35 to 60 percent. In 1942 a flat rate of 90 percent was adopted, with a postwar refund of 10 percent; in 1943 the rate was increased to 95 percent, with a 10 percent refund."[1]

It's important to understand this historical - and exceptional - aspect to those marginal tax rates and not misconstrue them as a fantastically progressive tax policy.

Setting aside those exceptional, war-related circumstances, I am skeptical that income taxation above 50% is workable. One may indeed enact such a rate but even in the absence of (criminal) tax evasion, legitimate tax avoidance activities will keep us below that threshold - a threshold that I think many people associate with basic concepts of fairness.

[1] https://en.wikipedia.org/wiki/Excess_profits_tax

The market seems to be doing well, how about those capital gains taxes that would finally hit the uppers.

I'm down with that too. A portion of my income comes from capital gains and honestly it's criminal how little they are taxed. (IMO)

> Raise my taxes by 10-15%

People keep claiming that they're in favor of that. In fact, ~50% of the U.S. population votes Democrat, so we should be able to extrapolate that ~50% of the U.S. population supports an additional "feed the hungry" tax. However, if they were truly being honest, they could easily donate 10-15% of their own income to food banks/red cross/etc. which would actually be vastly more effective in assuaging poverty than a tax increase, even if only Democrats participated. The fact that I don't see that being done makes me question the validity of those suggestions.

What makes you think it would be "vastly more effective?"

> However, if they were truly being honest, they could easily donate 10-15% of their own income to food banks/red cross/etc. which would actually be vastly more effective in assuaging poverty than a tax increase, even if only Democrats participated.

I don’t see why this has to be true. I’m also not going to sacrifice my resources and be competitively disadvantaged because other people don’t want to pay taxes. I’m going to continue trying to vote for a government that reduces the wealth/income gap, but until the collective decides it and works toward it, it behooves me and my kids to play the game individually.

So by that logic, if someone is drowning, you would not attempt a rescue unless there was a law that said it was required to try?

Ergo, we uncover the unethical basis of such position.

If your private life conflicts with your intellectual opinion, it cancels your intellectual ideas, not your private life.

and

If your private actions do not generalize then you cannot have general ideas

I don't see how this follows. Income is not evenly distributed across individuals, so tax isn't evenly distributed. So even if 50% of people donated 10-15%, that's no guarantee that it's the 50% of the high earners.

Also, philanthropy isn't a solution to systemic problems. It tends to focus dollars on the 'prettiest' problems -- it's not super attractive to donate to, e.g., portable toilet facilities. Aid programs ensure we're covering everything, including the ugly (or out of sight) problems.

Probably not. This stuff isn't randomly distributed. Many people will not see anyone in their close network suffer from this. Many others will see almost everyone in their network suffer from this.

Exactly. I know a few people affected, but not nearly the correct proportion. Most of the people I know, like me, have jobs that can be done remotely. That's unsurprising given how many of our social connections come through work. Especially for those of us who live somewhere other than where we grew up.

Yeah I've noticed this as well. For me, it's zero. For a colleague of mine, 6 friends/family died.

What I'm very curious about is the impact of super-spreader events. There's some indication that say 10% of activities are responsible for 90% of the infections, e.g. a football stadium, a concert etc.

What I wonder is, what does the distribution look like? 1% of activities cause 90% of cases, or 30/70?

And then, what happens to the R0 / infection rate, if you can ban/restrict those high-impact activities in particular? Does the coronavirus then start to mimic the impact of a much more benign issue such as the flu? Or would the effect be minimal, and does that mean that a second wave around august and follow-up lockdown is basically guaranteed?

That to me is what everything is banking on, with a vaccine 9-18 months away, markets will be butchered if we get a second wave+lockdown. If that doesn't happen, then unemployment figures / markets will probably recover relatively quickly given the relatively decent economic fundamentals going into this crisis, and the unprecedented government / central bank support packages.

> The optimist in me hopes to see people demand universal healthcare, social housing, food benefits, and more so that everyone at least has a baseline level of stability.

I doubt this will happen because one half believes this is all a hoax perpetrated by the other half.

There's a big problem with the statement and that is 'free stuff' vs. 'actual productivity' - it kind of implies a misunderstanding that I think is at the root of so many instinctive reactions to calamity.

First, socialization and central planning at that scale is essentially communism, so start with that.

Second, if almost nobody is working, then 'stuff' doesn't get made, and you can't feed or house many people for long. We know from history, that even if people could work, the government isn't really good at organizing a lot of that kind of activity.

If we want 'food' for people there is no way around the fact we must have people doing all the various bits of work that get food to our plates: farms, delivery, processing, grocery, transport. And that system depends on everything else.

Of course, we need more than food - housing etc. depends on so much as well.

So the answer cannot be 'print money' because that literally doesn't do anything.

The answer has to be something along the lines of: 'how do we get back to work safely'?

There might be some long term opportunities with housing and healthcare, but there are already so many things screwed up there, that basic regulatory changes could yield massive opportunities long before even the argument for socialization begins. Outrageous hospital billing, odd zoning, bad labour laws etc.. So much low-hanging fruit.

> And that system depends on everything else.

This is the bit nobody gets.

Imagine how expensive gurney casters will cost when there like 100 million fewer casters being produced every year.

People seem to implicitly think the world works like in a video game: as if NPCs have unlimited supplies of hardcoded goods available at a fixed price. In an MMO, if you printed enough gold, every single player could buy a whole houseload of healing potions. That's not how the real world works, though. You can't eat cash, nor are there machines that magically turn cash into food.

Turns out that even if you cover people's basic food and shelter, they still are interested in producing stuff -- whether that's art, software, or widgets, many folks still take pride in doing work. They may not work 40 hours, but I guarantee you people would still be working.

Edit: Also, providing social housing, universal health care, and basic food assistance isn't communism. France isn't a communist country, and yet they have access to those things. It's not a boolean flip between capitalism and communism -- we can have elements of both and tune it to what we'd like.

Yes. We can also tune in tp permanent 10%+ unemployment, similar to france.

Thanks, but no thanks

People don't always oppose larger social programs just because they want to screw people over. They sometimes oppose the programs because they think they do more harm than good. Generally speaking, not a lot of people are going to change their political opinions in a crisis. There's a lot of confirmation bias going around right now, although some people may pivot and argue for whatever would benefit / did benefit / would have benefited them personally.

Can you provide some data backing the assertion that not a lot of people change their political opinions in a crisis? Genuinely interested.

In any case, in our system not a lot of people have to change their minds; just a few moderate voters in swing states could be enough.

I mean, there are 20 million recently unemployed people who are probably wondering, "What are the safety nets like elsewhere? Why aren't we more like <country x>?"

They've just lost their healthcare. How can they not look at the rest of the world and say "Maybe they are onto something, not tying health care to employment..."

Yeah they've also been paying taxes for years when they were working, and are now wondering how the CDC could be so incompetent as to send out contaminated tests, and why we're fighting foreign wars but also talking about mandatory service for veterans because of this crisis, and why we dropped $2 trillion on debt and pretend money and for every dollar that went to the people you're talking about the country was 3 more dollars in debt. The people who were concerned about this before aren't going immediately to think, "Let's give this administration more authority over my healthcare decisions! We should set a precedent that they can make it illegal for me to work and then botch my unemployment claims!"

Let me guess: you already supported larger safety nets before this crisis.

I think there's a perfect storm brewing for v1 of UBI to happen. Andrew Yang put it on the radar, COVID is further straining people living paycheck to paycheck, and we'll have massive unemployment going into a general election.

I know more people affected than unaffected. I can easily count 15-20 people who were laid of or furloughed -- including myself.

Sorry, how do you propose to pay for healthcare and food if nobody's working? Ask for aid from other countries or some other solution?

And the stock market is unfazed. So now you know where most of that money (trillions of relief for Covid) trickled to. The financial markets. We basically printed money to assuage the fear and anxiety of the speculators to whom the world is beholden

Markets were expected worse (~16%), and strong Q1 earnings coupled with Fed pumping is why you have the uptick.

Serious question: How do you know that markets were expecting 16%? Where do you read that?

My wife has CNBC on in the background during the day while we WFH, which is where I saw them talking about it.

Your position sounds valid, but i also want to point out that we're at a point where "expectations" matter. For one, you can see from the past that initial claims reports every thursday were often far in exceed above expectations, yet all but one Thursday had stock market rallies.

Furthermore, stocks who missed Q1 earnings and provided or retracted guidance had their stocks increase the next trading day. So, to say the stock market jump today was a result of 14.7% unemployment rate vs the expected 16% is an unfounded assertion. Could it be that it's because US-China tensions have allegedly eased? Could it be that oil jumped 4.5% today and is likely to have given investors faith that demand for oil is increasing? Or could it be a bunch of other things at once? I don't think it's fair to distill the stock market to just one outcome anymore. There's too much going on at once.

I never claimed there was a single factor, but the better-than-expected unemployment was a large one.

I keep hearing comments like this yet no real indication of what we should do instead of having the market the way we do.

I have a lot of my personal wealth (which is not a substantial number compared to a lot of investors) tied up in two areas. One of those is the stock market (the other is real estate). Most of that is tied to index funds because the returns are good. 401K's and retirement accounts is basically where it is. I would imagine many of those who have any savings in the US are in the same place.

So, a few things. First, as a small time investor that has a good chunk of my future tied up in the US stock market, I certainly would not say that the stock market has been unfazed over the last few months. It has been quite up and down. I am glad it stabilized a bit so that this report didn't tank it.

Second, I am glad that the Fed did something to assuage the fears of the market. Remember my future, and many millions of other peoples futures, are tied up in that market.

Finally, let's stop making this out as if there are a few good ole boys sitting in a back room moving the market around while they drink scotch and smoke cigars and that they suddenly get nervous and start ruining everything. The finance market has some really brilliant people working in it and trying very hard to make money. What is the negative there? I think of it as a symbiotic relationship.

So, if you disagree with the market and how we are all beholden to speculators, what exactly do you suggest we do?

I think you are expressing the problem. The market doesn’t reflect economic reality but instead there are a lot of people who need the markets to stay up so their future is secure.

We are all dependent on a variety of complex systems to maintain our standard of living; the stock market is just one of those systems, and it is one of the most highly-visible, and widely reported.

How is that not reality?

For most people reality is to have a secure job and income. The stock market doesn’t reflect that reality. The fact that it’s going up helps only a minority of the people.

Yes, but a large enough segment of voters demand their asset prices keep rising, so that’s the reality of what the government will do.

Also, the governments themselves are so deeply invested in rising asset prices that their budgets will blow up due to not having money for their defined benefit pension promises.

Exactly. The market reflects the needs of the participants and gets manipulated that way. It’s not a fact based assessment of economic health.

Yes, the market is asset prices, so it's only going to reflect the reality of asset prices.

Unfortunately, statistics such as how many children get nutritional food or the number of hours parents get to spend with their children or how many families get to eat dinner together aren't optimized for.

Cities and States rely on the market for their pension funds. CA has ~$2 trillion in underfunded obligations ($83K per household)[1]. If the market doesn't magically make up the difference, the state will in the form of new taxes, budget cuts, and restructuring - or it can just go into a debt spiral like Illinois and default in 30 years.

Universities rely on the market for their endowments ($500 billionish). When the market goes down, tuition goes up.

~60 million Americans have a 401K worth about $6 trillion. Many of those people are approaching retirement or have already retired.

> The fact that it’s going up helps only a minority of the people.

You may not be directly helped, but you will definitely feel the pain (eventually) when it goes down.

1. https://us.pensiontracker.org/stateSummary.php?idcode=06

>You may not be directly helped, but you will definitely feel the pain (eventually) when it goes down.

Inflating assets by printing dollars greatly hurts the lower socioeconomic classes by devaluing the only thing they have which is dollars.

The stock market is not the economy. Jobs market and employment numbers are a better indicator. If the common citizen is unemployed, they won’t have money to spend, business will go bust, and it just makes its way up the chain bringing down the whole system.

The performance of financial markets represents an abstract value based on speculation. Stock prices derive from demand that buyers have for those equities. The basis of stock price from the fundamental performance of the underlying company is becoming dwarfed by the belief that the shares have intrinsic value.

I am not sure if I agree or disagree but I like where you're going. What is economic reality? That's such a tough definition.

A pessimistic view of the economy would say it is horrible because we now have a 14.7% unemployment rate and this is a record. An optimistic view is in an unprecedented time we have a 85.3% employment rate.

So, what is an economic reality?

One thing I do agree on, the market needs to stay up so as to secure the future of many.

> What is economic reality?

Employment and GDP contracting at historic rates. A pandemic that is not close to being over.

> One thing I do agree on, the market needs to stay up so as to secure the future of many.

So, this is a new thing in the world. It used to be that markets were thought of as a fair playing field* on which price discovery and capital allocation happens. Sometimes markets would go down - a lot - and that was okay. For most people, the market and the economy are separate. The market could crash - as it did in Oct 1987 - without that spilling over too much into the economy at large. Certainly when the market skyrockets the wealth of households below p90 are not dramatically affected.

So now, what are markets? Not a fair playing field for price discovery and capital allocation, but something else. And if they're something else, how should we view the long-term prospects for markets to really do anything meaningful at all? Are they just going to keep going up forever, entirely divorced from the performance of the businesses that comprise them? Seems like we're steaming for the icebergs if that is the way forward.

* = yes, I know they were never truly fair.

> Employment and GDP contracting at historic rates. A pandemic that is not close to being over.

I think you've made my point, this is a short term reality, and a pessimistic one. We don't have a model for the long term economic reality of this situation. We only have speculation and guessing. So we have a short term economic reality but nothing more.

To say that the US stock market hasn't historically effected the economy at large seems to forget the Great Depression. I believe it is taken as economic fact that the Great Depression started with the crash of the stock market in 1929. There was quite a bit of speculation and the market went up and down all over the place, but finally settled with a huge amount of unemployment and a massive reduction in GDP. We have put into place numerous measures to make sure that doesn't happen again, and we are using them, effectively.

Also, I disagree that the markets are entirely divorced from the performance of the businesses that comprise them. Most people don't look at the entire market. We look at indexes. Look at the DJIA. With the exception of Nike, Disney, and Boeing, which of the 30 companies in the index are hit hard by this pandemic? If anything, which of those companies are increasing substantially before of the pandemic? They aren't steaming towards an iceberg. They a solid, recession resistant conglomerates that have substantial production power.

Just because everyone dumps their savings in the stock market doesn't make it any more functional. I think it's obvious by now, considering the actions of the Fed, that the market is propped-up. The debate is actually whether this action is good to the broad economy. A pro argument would sound much like yours - because many people's life savings went into 401k it would be a disaster to let it fall (read be accurately priced). The cons is that this disproportionately helps the upper echelons of society, further increasing inequality - main street gets mostly decimated.

There was a good analogy I read some days ago by someone on HN:

> Equity markets are not supposed to be so timid that they hide behind the skirts of grandma and cling to grandpa's legs. The picture is more like they're holding a gun to your grandparents' heads.

So basically protecting your life savings is now entirely correlated with speculators winning big. This wouldn't be a problem if we'd all be winning and the pie was large enough for everyone but it definitely is not and it's going in the wrong direction.

Real indication of what we should do? Well I can give you my slant. The current monetary tools date back to the depression. The Fed uses two tools: the Fed Funds rate and the secondary repo market. That was fine back in the day when banks drove the economy by making loans. (Remember 'It's a Wonderful Life' with Jimmy Stewart?) There were no credit cards then. No smart phones with internet access to your bank account. The world has moved on but the Fed has not. Banks have morphed into 'financial institutions' and they want to maximize their ROI. So any money they get from Uncle Sam certainly doesn't trickle to retail, rather it goes into equities markets. You get more and more dollars chasing fewer and fewer equities (I am simplifying here-there are a lot more financial tools than equities including bonds, REITS, bitcoin, the dark pools, hedge funds,etc). But the bottom line is you get 'equity inflation'.

The money from the Fed needs to go to the people who will spend it. THAT is what an economy is - when people spend money to get goods and services. Now we have the infrastructure to do this. We need to give every taxpayer a Fed account. When the Fed wants to move the economy (and I mean the REAL economy, the place where people spend the hours of their lives) they need to get the money to the people who will spend it - the consumers. So they could make a monthly stipend to your Fed account. This Fed coin would have a 'half-life' encouraging you to use it before you lose it. Once spent, the actual amount is fixed.

At the very least, we need to get a better handle on our 'gross financial product' as a separate and distinct measure from our gross domestic product. When I read that our GDP increased but we have more unemployment than ever, I think there is some financial trickery going on.

No, https://slate.com/business/2020/03/federal-reserve-bond-mark... explains well.

For comparison, the BLS reports an all-time high for unemployment (one-year period) in the US was about 25%. It was 1933, deep into the Great Depression.

https://data.bls.gov/timeseries/LFU21000100&series_id=LFU220...

Markets really don't care about this number because it occurred in the past. Everyone knew the number would be very, very bad and it was.

What markets care about now is what happens next. For their part, US stock markets are saying everything will be Ok. The S&P 500 is trading 16% from its all-time high.

Unexpectedly (for me at least), everything is riding on how well the Fed can butcher the raging US dollar bull. It seems impossible, but there's a substantial shortage of US dollars, which has been wreaking havoc on the world economy for some time now, triggering negative yielding sovereign debt and other imbalances.

If the Fed succeeds, the debts for this crisis will be eliminated through a weaker dollar (dollar holders will pay in purchasing power), and things can go on more or less as normal.

If, however, the Fed is unable to bring the dollar down and hold it there for a long time, the ballooning debt will begin to choke the real economy. We'll see it first in interest payments to finance the federal government rising and eventually forcing cuts to entitlements and defense spending.

This would appear to set up a situation in which the Fed will try to err on the side of "caution" - adding too much rather than too little liquidity into the economy.

It's worth remembering that the Fed always gets what it wants in the end.

See:

https://www.lynalden.com/global-dollar-short-squeeze/

To preempt the apparently inevitable "wow stocks went up on this news why wall street be like that" posts : the reason futures are up currently and the market will be up when they open in a but is because this is better than expected. Wall street was expecting unemployment to rise to over 16% [0]. Therefore, the markets were pricing in an expected 16% unemployment rate.

The real number today is lower, meaning the markets are going to adjust up to meet the difference. That's why it might look like the markets are cheered by the unemployment news. They kind of are, it's better than they expected.

Edit: Updated the link to a non AMP link.

[0]https://www.wsj.com/articles/april-jobs-report-likely-to-sho...

To me this indicates that the financial markets are a terrible measure for the economic experience of most citizens. They are their own system that’s not connected to most people’s economic reality. I have no problem with that but for national policies we should stop looking at financial markets or GDP but try to optimize for average income or purchasing power.

The market reflects, rightly, that while the situation doesn’t look good for many certain fundamentals haven’t changed drastically YET.

For example, infrastructure is still intact, demand is theoretically still there just suppressed, capacity to produce is still theoretically there.

Unemployment is based on employers short to medium term outlook. I.e. Can I pay this person for a month and will the person be a net positive?

So the two measures differ and in weird situations like now we see how much they differ.

Or rather, it reflects that this what people believe.

You can’t bring a new business or new hires up to speed instantly. Not only are the lockdown months already lost but there’s a ramp up period. Further, some of the companies in the index likely won’t survive. Even if they will be replaced down the road that shouldn’t be reflected in the prices of currently existing companies.

The priced-in explanation is not plausible.

The narrative the market has taken into account ("priced in") the current economic factors is tiresome. If it did, we wouldn't up at the numbers we are.

The more likely scenario is the market is disconnected with economic conditions, and the low volume seen in this rally are the same set of market participants creating liquidity while the majority watch from the sideline awaiting more news.

A lot of businessy people buy into some sort of magical wisdom of the market.

It’s not a particularly wise institution, and pouring money in now is just institutional players enabled by free money coming out of government. The rest are lambs heading for slaughter, as there are very significant headwinds in our future that the market has not priced in.

The sophisticated participants are well aware of the economic realities, but as long as there's money to be made (eager retail investors tagging along), they'll keep this up, because why not?

There's an obvious moral hazard for these larger players, because as it stands today, heads they win, tails we all lose. We have a defacto policy of socializing risk for financial institutions.

You're not hearing about money guys jumping out the window in 2020 or 2009 like in 1929. The firms are corporations that insulate the principals from the risk. (Until about 20 years ago, many of the big players were limited partnerships, for example)

If you're so sure of that, I hope you are shorting the market.

I'm not prepared to take the unlimited downside on that, but I did largely get out of the market recently. The Dow hit the 7000s in the last recession, and every indication is that this one will be far larger.

Theres many ways to do that without unlimited downside. Buy long dated puts. If you really think the DOW will hit 7000, then buy gold because everything will crumble. What bad news do you expect to cause the market to decrease by 70%? States are opening up with success and even South Dakota who did absolutely nothing seems to be doing pretty well

> What bad news do you expect to cause the market to decrease by 70%?

The recession we've just entered?

> States are opening up with success

Sure, and the Iraq War was winding down back in 2003.

https://en.wikipedia.org/wiki/Mission_Accomplished_speech

When companies miss their revenue by 5%, the stock plunges. We're in a reality where whole industries are nuked.

I'm friendly with the guy who owns a gas station franchise -- his business is down 90%. The oil company, CocaCola bottler, candy distributor, Frito-Lay franchisee, gift card network, etc are all feeling that.

I don't have the cash or the time to do that.

My approach was to allocate my portfolio to 50% cash/short term bond in the fall/winter as a reaction to other factors that I wasn't personally comfortable with. I'll start dollar cost averaging into a more equity focused allocation later in 2020 or next year.

It's too risky for me right now, Federal policy is so unpredictable and insane you have no idea what will happen. For example, the proposal floated last night to delay 2019 tax filings to after the election will bankrupt states with income tax, whose policies didn't forsee a madman POTUS.

If we end up in a depression-like state, i may use the cash to keep my house, etc.

I think you meant economists. People working in finance are usually under no illusion of whether the market prices in all the information at a given time, and are rather focusing on who does what.

I'm more talking about people in business in general. You'll see alot of posts on HN where people have faith-based belief in the market, for example.

Finance people make their livings working around information asymmetry and optimizing for market outcomes. (But remember, the thumb is on the scale, and many are too big for the institutions to fail!) If the market were magically aware, they wouldn't have a job.

Exactly, and it doesn't matter whether or not markets are actually efficient when it comes to explaining this price move. People were willing to pay what they paid for stocks yesterday. Today, news is better than expected. They'll now be willing to pay more. If they believe that markets are efficient, whether or not they actually are, that'll support buying even more. So better than expected news makes prices move up. The main point I'm trying to make is that this move isn't because traders are happy there's so much unemployment.

I am also suspicious of the market disconnect from the broader economy, but I wonder what the Fed is up to. They have announced they are going to purchase corporate debt, among many other things. In the last recession, they didn't report everything they put money into and it took an act of Congress to get a limited report of their otherwise unreported activities.

Totally second this notion as there is no actual transparency into the market so no-one (save for maybe a select few insiders) actually know whatsup.

Anyone who claims to know things (beyond an idea, theory, or speculation) about the equities market at large whether on HN or anywhere is outing themselves as full of it.

This underlying opacity cannot be ignored for flies in the face of all the 'already priced in' arguments and 'rational actor' notions.

The official rationale is bank stability and credit requirements needing a certain minimum amount of liquid cash by law and it is collateraled loans. (Although corporate bonds as collateral is a concerning escalation as either needing to take them as they were out of free treasury bonds or worse given needlessly.)

Do you know what sort of things were otherwise unreported?

I'm also a bit suspicious (apolitically) about the current administration's 'attention' to the stock market. It's uncommon to see presidents tweeting all-time highs every week and it wouldn't surprise me if in a few years from now we found out some shady propping up had been going on.

Thanks for saying this. The "Priced In" fallacy has been on full display since the pandemic began. As late as a few weeks ago people were still talking about a "V-Shaped Recovery" and now the narrative is changing to a long, slow recovery.

I have no claim to know exactly what's going on, but I don't think the markets are efficient, and I don't think they're random. I think decent theories are that the markets are reacting to unprecedented Fed action and/or there are a lot of retail investors attempting to "buy the dip". It's probably fair to say there are large disconnects from business fundamentals and what it actually means when economies shut down.

Howard Marks put it in a way I find compelling: "The bottom is when there's no more optimism left" (paraphrasing). If I had to bet (and I am), I'd say there is a lot of wishful thinking going on. People want mid-March to be the bottom, so they buy, and so prices go up. Prices trend up and so... more people buy. Feels like a ton of confirmation bias with big consequences later on.

I actually think we might see a change in investor sentiment once things do start opening up and everyone realizes the damage done (many businesses closed, defaults, still-high unemployment, etc.) Again, I'm no expert but it feels like a good time to be fearful w/r/t investments

Having worked in finance as a non-trader, people underestimate how group think-y professional traders can be.

Hasn't it already been pretty V-shaped? Sure some sectors are going to get hit harder than others but markets are already back to levels from a year ago

"Recovery" refers to the economy, not the stock market. You can't say the economy has recovered yet while unemployment is still going up and GDP is still going down. The idea of a "V-shaped recovery" came from the notion that demand dropped and unemployment spiked because the government imposed lock downs, and once those lock downs were removed everything would just snap back to the way they were pre-corona.

>The more likely scenario is the market is disconnected with economic conditions,

Also,

1) passive investment represents a much larger fraction of stock holdings than in previous decades.

2) a significant fraction of these passive investments are held in retirement accounts which cannot be easily liquidated.

3) another significant fraction is held by wealthy buy-and-hold investors which may never need to liquidate assets.

For the most part, I think the stock market is going to be stable for quite a while because there's really no viable investment alternatives. It's not like you can go into bonds because yields are basically nothing.

Now, if some rules are passed that allow for 401ks to be liquidated without penalty, then that might be a cause for concern.

> Now, if some rules are passed that allow for 401ks to be liquidated without penalty, then that might be a cause for concern.

The CARES act did that a month ago: https://www.businessinsider.com/personal-finance/coronavirus...

There is also the drug addict reaction where more bad news means more QE coming means markets up rather than down.

Why is it a given that the stock market is reacting based on reality instead of the alternative (that the modern stock market is almost entirely divorced from "the economy")?

The stock market is both reacting on reality and is divorced from "the economy," and will continue to become more and more divorced from "the economy" as long as the financial performance of publically traded companies continues to be divorced from GDP. The stock market value is the expected net present value of the cash flows of the assets that make up the market (realized through dividends, buybacks, exits, etc) (and keep in mind that the expectation can be and will be wrong/influenced by behavioral factors etc - expectations are calculated by humans). Today, lower unemployment than expected meant that traders believed companies' bottom lines will improve as more people than expected might have incomes and spending money. Take for granted that the market price yesterday incorporated the expectation of 16% unemployment (and I notice some argument that it doesn't - it's pretty much irrelevant if it actually did or didn't when it comes to explaining the price move today. People were happy for whatever reason to pay the price of the stock at market close yesterday with what they knew about the economy. Now that the news shock is positive, on average, they will be willing to pay more than if they recieved no news). Then, with good economic news, that investors believe will mean an increased net present value of the stocks on the market, you'll see prices go up.

If you’ve been following the headlines for the past month, there’s always some reason. Easy enough to pick something out of the air—“Chinese-American sniping less aggressive”, “Oil futures markets not quite so screwed up”, “a drug shows promise in an n=20 study” but the fact of the matter is that neither the headline writer nor anyone else really knows why the market is rapidly erasing all of this year’s losses and trending towards all time highs while economic output continues to crater and companies go bankrupt.

Perhaps investors believe that governments will do whatever it takes to make investors whole given the political power investors wield through their votes and political donations. Perhaps they are even correct. Why don’t headline writers say that? “Stocks continue to rise while unemployment goes up because rich people confident they control governments”? It’s as likely or more to be true than the “priced in” narrative they’ve been hawking.

CNBC and financial publications always love to attach a narrative/reason to every stock movement. But the fact is nobody knows. There are just too many participants, each with their own agenda and prejudices.

The “priced in” narrative is just another made up reason, but as you said, it could simply because investors believe the government just won’t let the market fail.

The problem with saying things are 'priced-in' is that it's a basically worthless statement. There are so many things priced in, that it is impossible to know or understand them all. Some are right, some are wrong, and many are in-between.

I am an efficient markets believer, but I think most of the talking heads are a bunch of hot air.

It is a very worthless statement if you really think about it. Everything is priced in.. because that's literally the definition of a price - it's the cumulation of everyone's belief of what is going to happen. That's like saying water is wet.

The Fed’s actions are the only rational explanation. Many large companies who had access to the investment-grade bond market were locked out and having to raise as if they were junk quality. Then Jay Powell said the Fed would buy corporate debt and would pretend that everyone’s credit rating was the same as before the crash in March.

The market hit a hairpin turn around that time and started heading up.

shrug

The U6 number from the report is 22.8%. U6 being folks who are out of a job but not properly on the dole.

I would expect that number to be north of 25% in the upcoming May report.

Definition of on the dole: Unemployed and in receipt of state benefit.

Origin of on the dole: In the UK, Unemployment Benefit has been known by the slang term 'the dole' since WWI. This derives from the 'doling out', that is, 'handing out' of charitable gifts of food or money.

Wow, I'm British and I never made that connection before between "the dole" and the verb "to dole out". TIL.

Unemployment numbers are not the only issue at hand, from reduced hours to outright cuts in salary; we just took ten percent for two months and it can get to be more, an I have seen others reporting greater than ten percent for regular salaried employees.

Unemployment is horrible but don't discount salary cuts either, for some single earner families to include those only recently forced into single earner it can be very stress inducing

Tesla had 20% salary reduction.

And yet market futures are green, just like they always are after horrible news.

How high does unemployment have to get before investor sentiment shifts and the market tanks? 20%? 50%?

Was the market severely undervalued a few months ago, when we were previously at these levels? It’s hard to see how this pandemic is anything other than a huge drag on the economy over the next few years, at least.

Looks like you posted as I was typing my comment responding to the inevitable "why are the markets up" comment haha.

This news is better than the market expected. They had priced in an expected unemployment rate of 16%[0]. Traders dont wait for the bad news to make buy sell decisions, they traded off of what they believed the report would be and had forecasts made, sending stocks down on average. They were wrong, so the markets will adjust for whatever the new impacts are. Even if the actual unemployment rate was exactly the forecast, the markets will have gone up because the uncertainty in that part of the forecast will have gone away, and lower uncertainty means higher valuations, all else being equal.

[0]https://www.wsj.com/articles/april-jobs-report-likely-to-sho...

That only makes sense for an explanation of why the market is up today, not why it's hanging around the levels it was in the fall of 2019. Not everything is priced in. Given the collapse of consumer demand, the depression-era surge in unemployment, the loss of GDP, and the dim prospects of a rapid recovery in 2020, the market was either severely undervalued in 2019 or is severely overvalued right now. Or both.

> Given the collapse of consumer demand

Consumer demand has generally shifted, online commerce is seeing a boom. It's reasonable to theorize there will be a brick and mortar consumer boom once things normalize.

> the depression-era surge in unemployment

Unemployment includes the losses the market has already accounted for, temporary unemployment and reduced hours that will go back towards normal, and the initial numbers aren't as bad as theorized (but those numbers are suspect).

> the loss of GDP

Yeah but everyone else is losing GDP too generally.

> the dim prospects of a rapid recovery in 2020

Maybe. I've been very pleasantly surprised at how effective we've flattened the curve and the overall trajectory figures are much better than initial estimates pegged them at. Many places outside of the eastcoast have done massively better than predicted, and even NYC is doing a good job of staying within hospital capacity.

Remember when this first happened we had no data, and the market corrected assuming the absolute worse. Now we're finding out that things are not as bad as the initial models showed they would be - and the initial models suggested crazy numbers - so while the current situation isn't all roses, it's generally better than anyone honestly predicted.

> Remember when this first happened we had no data

Every time news come out and people wonder why the market is up, this is what they miss (and I've explain in more detail in other threads). Risk is priceable, uncertainty is not. Bad data (not wrong data) is better than no data.

When people say 'it's priced in' what they typically mean is that uncertainty often pushes the market lower than bad things that are knowns.

And, it makes sense. Individuals are almost always more stressed over an unknown than known bad news. It's human nature.

Don't forget the unprecedented level of government stimulus, the enormous bailout, and incredibly low interest rates. That's a few trillion bucks pumped in, plus the government has shown its willingness to limit downside risk with absurd levels of bailouts

It's also the government that forced the economy to shut down. I think it's fair that if they are going to force close the economy they shoulder the burden

My pet hypothesis is that the market is pricing in a large amount of expected near-term inflation. In other words, it's not that the market thinks that companies are not going to lose much value due to the COVID-19 pandemic, it's that the market expects that the dollar will lose almost as much value as the average company.

Share price is an exchange rate between dollars and fractions of ownership of a company - it goes up when the value of the company goes up, and also goes up when the value of the dollar goes down.

Of course take this hypothesis with a large grain of salt - I'm pretty sure there exist ways to figure out expected inflation, but I'm not sure what they are. Specifically, if I knew of something like a Consumer Price Index futures market, that would fairly definitively answer my question of whether expected inflation is a large part of why the stock market is priced so high relative to the dollar. Absent something like that, I have no strong evidence for or against my pet hypothesis (if you know of something like that, please do let me know).

I think your hypothesis explains part but not all of the situation. Complicating things, inflation is surprisingly hard to measure. One of the main components of CPI is rent (or rent equivalent for homeowners). It seems unlikely that rents are going to skyrocket anytime soon, which means that by the official measure, in the short term deflation might actually be more likely than inflation.

If you are looking for "futures" on CPI, you should probably look at the pricing for TIPS (Treasury Inflation Protected Securities). There was a new issuing of a 5-year TIPS a couple weeks ago, and the pricing was about the lowest ever. Which is to say that the market expects very low inflation as measured by CPI-U: https://tipswatch.com/2020/04/23/real-yield-on-new-5-year-ti....

The pricing for TIPS looks like exactly what I was looking for, thanks!

So that is pretty strong evidence against my pet hypothesis that the market expects that a dollar in the future will buy less value. While I suppose it is _possible_ that the expectation is that the cost of things not included in the CPI's basket of goods will increase much faster than the cost of things included in the CPI's basket of goods, that seems like quite a stretch, and I see no particular reason COVID would make that more the case now than it was 3 months ago.

At this point I am very confused about current market valuations. The market is only down around 10% from its peak valuation, implying that people smarter than I am think that the combined effects of the shutdown of large parts of the economy for an indefinite period plus whatever downstream effects the resulting bankruptcies / disruption have only reduce the collective net present value of publicly traded companies by around 10%. As a layperson I wouldn't be surprised to see fully 10% of publicly traded companies by market cap go bankrupt, which I expect would eliminate that 10% of NPV right then and there. But right now if you think there's a better than 50% chance of a 10% drop in the S&P 500 before the end of the year, you can make a killing on stock options (sell puts at ~330 to ~340). So clearly people are putting their money where their mouth is when it comes to betting that COVID won't have further massive impacts, so I must be missing something.

I'm really wondering what I'm missing though. Maybe 10% of companies by market cap going bankrupt is actually really implausible, or maybe there's an expectation that existing publicly traded companies will expand to fill in the niches left by the companies that die off. It's kind of maddening not understanding what's going on though.

Markets think into the future, not the present

>Markets think into the future, not the present

How far into the future, then? Over a long enough time span everything goes to zero. Are there no future consequences to record levels of unemployment? Everyone just goes back to work in the fall like nothing happened?

It’s anyone’s guess but the market being green means investors are optimistic about the future. Everyone going back to work is not an unrealistic scenario since there are countries in Asia that are already doing this.

Also keep in mind unemployment rates are expected during a pandemic. They are apples to oranges when comparing them to high employment rates during times of normalcy.

Finally I think it’s very easy for humans to overestimate current situations and underestimate just how easy it is for society to forget what it was like half a year ago.

>Everyone going back to work is not an unrealistic scenario since there are countries in Asia that are already doing this.

You're not following the economic story very closely if you think any of those countries are "back to normal".

>Also keep in mind unemployment rates are expected during a pandemic.

Do you have a source to anything at all about how any of this was "expected"?

I never said those countries are "back to normal", you're misquoting me. I meant to say they are going back to work. Further compound that by countries like Sweden that are business as usual

You don't need a source. You already know it will lead to higher unemployment since pandemic -> everyone staying home -> businesses halted -> people losing their jobs (although the market has judged this as ephemeral)

It’s not “business as usual” in Sweden. Many are now questioning their approach.

>you're misquoting me. I meant to say they are going back to work.

Oh, so when I asked if people were "going to go back to work like nothing happened", and you replied "Ackchyually, Asian countries are going back to work" you deliberately left out the "like nothing happened" part, and are now agreeing that it's not "back to normal"? Got it.

>Further compound that by countries like Sweden that are business as usual

Not true.

>You already know it will lead to higher unemployment since pandemic -> everyone staying home ->

In what other pandemics did everyone stay home and unemployment went way up?

I have no idea what kind of straw man argument you're trying to make anymore other than I think you're looking to pick a fight by being pedantic about words. So I'll just leave it at that.

Except for all the times that they don't. If we retest the lows (likely,) this talking point will go away for this cycle.

I think it's a combination of three factors.

First, central banks are propping up the markets and have stated they will do whatever it takes. That gives investors confidence that they wont face excessive risk.

Second, unemployment is not yet affecting that much the sort of people who invest in stocks, upper-middle class white collar workers.

Third, investors are still optimistic that this will be a temporary setback and things will return to normal fairly quickly.

The markets already know the figures are terrible and that’s priced in already. Unless the numbers come out worse than what the market was expecting there’s no reason for the market to go down on announcement.

Often the market will go up on bad news because the market had been expecting the news to be even worse. This sometimes happens when companies have a bad quarter that was less terrible than people had feared and the stock goes up quite a bit.

>The markets already know the figures are terrible and that’s priced in already.

I'm amazed that there are still people out there that believe the stock market is composed of a ton of rational actors calculating the net present value of future cash flows from these busiensses, and buying and selling shares accordingly. I'm sure that's how Shopify has valuation metrics far higher than Amazon did during the peak of the Dotcom bubble, or how Uber loses $3B on $3.5B in revenue, while admitting their "growth product" sucks, and it goes up 10%+, or how companies like Virgin Galactic can lose $60MM on $250k in revenue!

If you ask me, stocks are going up because the entire global finance system faces tremendous uncertainty, with every country printing money as fast as they can, trying no to collapse into depression. There is literally no alternative to US stocks.

Thank you Based God [0]

[0] https://twitter.com/lilbthebasedgod/status/12396035023068815...

I think it makes sense that significant numbers of stockholders right now would rather Hold than Sell. Unless you really need the cash from liquidating right now, there is a good argument for riding this out and avoiding selling low.

I wonder what the chances are that the treasury and/or fed are buying equities en masse behind the scenes. It seems like a politically savvy move: come November, just point out that the stock market is going through the roof during a pandemic and guarantee your re-election.

Current prices reflect the ongoing monetization of gov and corporate debt. If the Fed today announced they will refrain from any further QE then markets would really fall.

What is the unemployment rate for software engineers? Can't seem to find this in the BLS data

"Information" is probably the most representative category, which shows an unemployment rate of 11% in table A-14, compared to 3.5% a year ago.

IIRC anyone looking at the unemployment rate has to look at some factors that could inflate or deflate the rate. The unemployment rate is a proportion of those seeking employment that do not have a job. This means that as time goes on, people who would like to have a job stop seeking and therefore stop contributing to the unemployment rate (eg. someone going homeless actually makes the unemployment rate go down). On the converse side, seasonal workers and those in between jobs also inflate unemployment numbers to a small extent. In addition, the employment rate does not measure underemployment, which is important as the gig economy becomes more and more common (although perhaps not as much during quarantine).

Am I the only one who looked at all the graphs and thought, man this is going to make it really hard to make good graphs during the next recession :)?

This is just like the great depression a hundred years ago

And Dow Jones is up by almost 400 points. Go figure..

High unemployment means higher likelihood of Fed support. Equities markets have largely decoupled from the state of the economy.

I posted the official numbers and report from the BLS (https://news.ycombinator.com/item?id=23114063) but it never caught traction. Same goes for other times I post from the proper source. However, it seems like HN has a bias for WSJ and NYT articles. In my opinion, the BLS report is more enlightening and breaks down sectors.

Is there a reason why official government reports never catch traction?

Link for the lazy: https://news.ycombinator.com/item?id=23114063

I'm not sure why the WSJ isn't a "proper source".

But I think that people want more of a story so they tend to favor news articles over official sources. If you look at the BLS report, it's hard to even read because of the font. I believe both are of value, but that's why I figure people favor the other formats.

>I'm not sure why the WSJ isn't a "proper source".

The paywall I hit on this article could be one reason.

Paywall, incentives to increase clicks, and so forth.

I canceled my subscription last year because of the soft-core Fox News style "opinion" pieces and fact wrangling they engage in. It is a News Corp publication now. I miss the old WSJ.

There is an argument to be made that the opinion pieces are just there to spark sufficient amount of outrage to direct clicks to your website. WSJ, Marketwatch and multiple others follow that principle.

Regular reporting still appears to happen.

The WSJ has had a... unique... opinion section long before clicks were an issue. I think their purpose is, as with a lot of opinion writing, to make the readers feel good (smart, righteous, wise, important, justified, etc). But the WSJ has a subscriber base unusually dedicated to a) getting money, and b) keeping it. And a lot of Wall Street as an entity is less focused on value creation than cash extraction, which is a particular mindset. So the opinion section is going to reflect what's important to the key audiences.

My understanding is that pre-Murdoch, the news and opinion sides were thoroughly separate. Hopefully that isn't getting lost.

Would you put up with this in any other industry?

"It's okay that mega-million corporation X misleads and manipulates people in order to take money from them, because sometimes it uses that money in a meagerly beneficial way"

I am confused. I am not sure this is an accurate rephrasing of what I said. Could you elaborate a little bit?

It is largely owned and directed by Rupert Murdoch who is infamous for inflammatory tabloid journalism (New York Post, Fox News, etc.) https://en.wikipedia.org/wiki/Rupert_Murdoch

Link to the your primary source post for bls.gov? I’ll upvote it.

https://news.ycombinator.com/item?id=23114063

What specifically differs between the BLS report and this WSJ article?

One is the actual primary source.

Sorry didn't realize that. I wonder why the US government is just paraphrasing WSJ articles though??

>I posted the official numbers and report from the BLS but it never caught traction. Same goes for other times I post from the proper source. However, it seems like HN has a bias for WSJ and NYT articles. [...] Is there a reason why official government reports never catch traction?

Just a theory but titles of threads do matter. I'm not claiming it's the reason in your case but it might be.

- Your previous title with no activity: "BLS Reports 14.7% Unemployment Rate"

- This title that attracted upvotes: "April Unemployment Rate Rose to a Record 14.7%"

Your title's matter-of-fact tone is clinical and missing the impact of the 14.7%? Hmmm... the 14.7%... so... is that a lot or a little?

The phrase "rose to a record" is immediate spoonfeeding of the impact to potential readers.

Good newspapers like WSJ, NYT, Buzzfeed, etc know how to craft titles to get readers to click on them. This is often abused and thus disparaged as SEO/clickbait. In this case, providing a little bit of a statistic's impact could be helpful.

The problem is when a submitter wants to follow the site guidelines, as OP did.

You can be correct, or you can get traction. I think a lot of technical people don't understand this. They get mad at people like say, Greta Thunberg, for not being purely clinical, accurate, scientific and dispassionate. But, meanwhile the people working to make the world believe climate change is fake are emotional, manipulative, and actually get traction against pure, reasoned, calm argument.

So do we want to be correct, or do we want to win?

This becomes especially complicated when some folks (such as myself) have, for better or worse, developed a gag reflex that is triggered by overly emotional or manipulative content. Even if we agree with the message it can be hard to willingly align yourself with people who are 'cheating' in this sense.

>So do we want to be correct, or do we want to win?

It's nice if you can do both. Unfortunately, most systems in the world are actively being gamed which means adding additional constraints to systems (like being correct, clear, forthcoming, honest, etc.) often put you at a disadvantage.

Is HN actually based on this premise of winning? I come here to escape that premise in media (social or otherwise).

Any site that tracks the "score" of your contributions and then makes your "score" visible on most pages is going to be about winnings whether that's the stated goal or not. That is a textbook way to gamify things.

Obviously this applies more to comments than to submissions but the comments are a large part of the user experience here so whether HN is "based on this premise of winning" boils down to a question of the importance of the comment section.

Dopamine feedback from imaginary points, and validation from mostly like minded peers makes users keep coming back to this website. Otherwise user retention would non-existent.

Interesting to present it as a binary tradeoff.

I want to win, but I want to make sure that the thesis has some modeling diligence =)

Is there a name for the phenomenon where your opponent always seems to be playing more dirty? Or where it's hard to see your own's side's emotional manipulation for what it is?

I know I've often fallen prey to this effect. You feel like your team has a disadvantage and then think the other team crazy when they claim the same. Almost like our brains are trying desperately to let us feel justified in relaxing our moral code.

Cognitive dissonance is the uncomfortable feeling when one sees through the effect you are describing. Perhaps "illusory cognitive consonance"? It's a bit of a mouthful...

Of course, confirmation biases and other related phenomena help us construct and reinforce these perspectives.

The Frollo effect?

judge Claude Frollo longed to purge the world of vice and sin / and he saw corruption everywhere, except within.

What is it that you want to win exactly? Control? The right to tell people what to do?

I’d much rather be correct, and let people make their own decisions. Otherwise this thing you call “freedom” is just empty words on a bit of paper.

> What is it that you want to win exactly? Control? The right to tell people what to do?

No, not control - principal reduction of problems associated with climate crisis.

That’s not going to happen without a huge cutback in our standard of living. The other side knows this, that’s why they fight so hard.

Don't understand what you mean other than this: different reality. Climate crisis is going to be the cause of a huge cutback in our standard of living. Science.

Persuasion isn't control, though. And being coldly analytical is only feasible if everyone agrees.

It's more of last comment standing.

Conincidentally I came across a relevant Twitter thread about creating headlines. NYT does A/B testing in the morning to determine which headline they should keep for the rest of the day. https://threader.app/thread/1258492772442681346

The last tweet reads:

For what it’s worth, nytimes senior editor mark bulik said, “we’ve learned a number of lessons from months of testing... clear, powerful words and a conversational tone make a big difference.”

> “we’ve learned a number of lessons from months of testing... clear, powerful words and a conversational tone make a big difference.”

Haha, 'clear, powerful words...'. That's an understatement.

This Bill Maher clip seems somewhat relevant:

* https://www.youtube.com/watch?v=UcvIQJ-QurQ

Unfortunately, I can also see that this tactic is a tool for causing clickbait and stories to be written a certain way, because editors get tuned to what causes people to click the most.

"Guess what government figure just hit 14.7% today?"

"These 3 sectors hate the latest unemployment figures!"

Only if you allow click-bait to be a part of the A/B testing in the first place, which is where a sense of serious journalism comes into it.

It’s unfortunate that a neutral tone loses out to that with oomph.

Both titles are factual — but this one provides context to help evaluate the data. I don't think that's unfortunate, it just shows the impact & effectiveness of good writing.

It can be tough to separate useful context from editorialization. In a way it'd be nice to have a separate meta conversation thread for every post, on every platform.

Also, most people don't know what the BLS is, and as the first word in the title, most people would see that and not bother reading the rest.

Eric Weinstein posits that the purpose of news organizations isnt to relay raw information to the public, but rather, it has the sole purpose of telling you how to feel about the information. They provide you with narrative. Exposing a person to a dataset without a narrative puts the burden on the person to have to parse through and construct their own narrative. This may be just too much for the average person and hence why they prefer their data to come bundled with a narrative - it is a time saving and bias confirming heuristic.

I am not saying that this is true, but it certainly is an interesting idea to consider and think about.

Eric´s take on this is worth watching: https://www.youtube.com/watch?v=Nu_-qV-9hMo

Wiki link to the phenomenon in question: https://en.wikipedia.org/wiki/Emotive_conjugation

> This may be just too much for the average person

Having to construct your own narrative all the time is most certainly too much for any single person. If I had to come up with my own interpretation of everything, I'd be sitting here crunching data all day long until I go crazy. One always has to choose their fights, and for everything else you have to find someone else to trust.

That is indeed the point he makes. That rejecting the institutions isnt a viable strategy. Fixing the institutions however, in order for them not to hijack your emotional state, is probably the right way to go.

To take something especially apropos to the WSJ... In earnings releases, companies will generally try to spin their earnings in the best possible light by focusing on the positives. Maybe claim extenuating circumstances outside of their control like foreign exchange headwinds. The casual reader probably doesn't have any way to tell whether it's mostly BS or not without doing a bunch of their own research.

To be fair, it often feels like the interpreted narrative by the financial press is made up on the fly with little regard to whether it actually makes sense in context.

Yes most financial news commentary is totally made up by clueless journalists and "experts" just filling up space. Like the classic "stocks fell today due to profit taking". The reality is they don't know why market indexes changed and are rationalizing after the fact.

The news cycle actually doesn't go that fast for it to be hard to keep up with the two main competing narratives & the primary sources. Mainly because the mainstream media cherry picks what it wants to cover then runs it into the ground.

I keep the news on all day on a monitor as I work and unless it's a day like yesterday you'll hear the same headline repeated over and over all day with the same facts.

Now if you want to be an expert XYZ in any of the fields that touch those subjects that's another story, but not being an expert in something never stopped people from posting as one before.

==Mainly because the mainstream media cherry picks what it wants to cover then runs it into the ground.==

The media (not sure what work the word "mainstream" is doing in this context) cherry picks what will give them clicks and views then runs it until it stops getting clicks and views.

To clarify mainstream media in this case is cable news and major newspaper outlets.

I feel the opposite. Having to sift through the bullshit and separate feeling from opinion from guess from estimate from fact, when they're all presented the same way (often through a lens of indignation and outrage) is much harder than coming up with my own interpretations and narratives from impassive "boring" presentations.

Take scientific reporting. How often is the long many paragraph article written by e.g. bbc ridiculously wrong compared to the few sentence abstract of the paper itself? Sure, I'm not going to understand it all, but the misleading mainstream article that does the work of doing interpretation and narrative for me is more likely to make it worse than better.

I mostly disagree. The purpose of news organizations is to collect data from different sources and provide objective, interesting and useful information that can be derived from the data.

For example: there's a new academic paper describing some discovery. I want an easy to understand and accurate summary from the media. What I don't want is them telling me how should I fee.

you´re missing the point.

No I'm not.

In this case I recommend writing to hn@ycombinator.com and asking them to merge the threads and swap out the URL in this post.

There are very few people who want to wade through primary source data. I don't -- doing that is what journalists are paid for.

I think government and scholarly articles are very hard for common man to understand because they use terms and abbreviations which can be understood only by practitioners of that field. For example BBC carried an article about a black hole discovered near our solar system and at the end included a link to the paper published by the researchers. I understood the BBC article but the scholarly article was super hard to understand and I couldn't go beyond the first paragraph. Similarly the comedy shows on TV also have laugh tracks to tell people when to laugh otherwise some of jokes are too complicated to be understood in short duration.

Here is the BBC article. You will find the link to the scholarly article at the end. https://www.bbc.com/news/science-environment-52560812

edit: grammar

The main reason might be because the current government is republican and this forum is mainly democrat but that is just a guess... The admins also manipulate posts, votes and front page visibility so it is hard to say for sure.

Original source isn't necessarily the best place to consume the information for many people. (In general, I have no opinion in this specific case)

I feel like HN has an original source fetish. I remember there was an IPO and the HN submission was some weirdly formatted document submitted to the SEC, it took me a while to understand what it is about. It would be better to simply link to some article which would contain a link to the document for the 1% of people who are interested in reading it.

> I feel like HN has an original source fetish

It’s the search for veritas. We are a bunch of scientists, engineers, and thinking people. We want to go straight to the source and understand from first principles.

Perhaps it's that most people have never heard of "BLS", but they trust WSJ / NYT.

Newspapers provide context and interpretation. And they are designed to be read. A big block of monospace text is not inviting for most people.

You may think hackers are purely data-driven rational beings, but they are in fact humans too, and prefer an enticing headline.

The french economy has been hit harder than many other countries, probably due very generous short-time working relief measures, where the state pays 90% of the former salary:

"Could there be a connection between the deep recession - in no other eurozone country did economic output in the corona crisis collapse as sharply as in France - and the generous short-time working arrangements?"

https://translate.google.de/translate?sl=auto&tl=en&u=https%...

Tl;Dr: France once again becomes socialist, discovers that incentives are powerful.

So France became socialist because they did the most generous handouts to companies?

Yes.

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