Jobless claims, total unemployment level worse than expected | Hacker News Reader

Jobless claims, total unemployment level worse than expected

cnbc.com

77 pointsReedx86 comments

Interesting note that during WW2 people expected another great depression, so policy makers coordinated (GI bill, etc.) and we actually had an economic boom.

We now understand much better how to tweak a country’s economy.

Some key points for the next recovery phase:

-Give tax incentives for automated robotic farming, our food supply should not be dependent on poor migrants, we need to transition to pesticide/herbicide free produce that can ramp up supply on demand. Workforce will be highly skilled as well.

-Make massive investments into local micro-grid community solar. This will make us more robust to cyber attacks and black outs and provide lots of jobs. Solar is now the cheapest power generation method.

-Ditto on batteries. Make 10 more gigafactories, invest in Lithium extraction from the ocean and recycling infrastructure.

etc.

I enjoy how you suggest that there might be an social/employment problem but then you proceed to suggest things that will actually eliminate employment.

Resource extraction is extremely productive these days. What required thousands of laborers a century ago can now be done with mere dozens of laborers. Replacing coal/LNG with solar and batteries would be a net job creator (and, in the case of solar, distribute the jobs more evenly across the country).

Robotic farming is an interesting case. First, successful robotic farming for labor-intensive crops would be a huge deal. Think John Deere v2. Tons of great paying jobs. Try telling Moline, IL that tractors kill jobs. Second, most of the jobs offset by a successful product in this space are migrant jobs; farm workers enter the US for the growing season and then go back to (usually) Mexico once the growing season ends. Without those jobs, the migrant farm workers simply wouldn't migrate into the US. So, you'd eliminate jobs globally, and Mexico in particular would suffer, but the overall employment effect would probably shake out net positive in the USA (because most of the displaced laborers aren't permanent residents).

Also, not automating work for the sake of keeping people busy seems... immoral.

You bring some good points but I am more simply contrasting the suggestions (tax incentives for business) with the actual GI bill (massive benefits for millions of people)

Right. So, what are "Ground Infantry" in World War Covid?

Apparently not nurses or farm laborers. Nope. Cops with zero accountability. Not hospital workers. Not food producers. Police Union Memebership. All others be beat.

Well, universal basic income

Does this assume policy makers and those voting on said policy are "good actors" acting in the interest of the many?

I'm not sure that is the situation we are dealing with at the moment.

Any significant automation has to be done with UBI or a 4 day week. We cannot keep trying to create more and more jobs in "the service sector".

And the stocks continue to rise, I wonder how far this dead cat can bounce

I'm assuming this news means a 20% gain is incoming. A zombie apocalypse would cause it to triple, because "just think of all that quantitative easing!"

Probably until the bankruptcies start rolling in.

And the second rising wave of infections this autumn cause an effective shut down (due to fear if not government action)...

I second this. I think once this starts happening en masse, we'll see a correction in the markets. I dont think we're too far off: https://www.npr.org/2020/06/03/867856602/millions-of-america...

It's interesting because I'd expect a certain number of people to be cashing in their 401ks and IRAs, which surely would have _some_ effect on the stock market, but it seems that as well as the recent political situation have had zero effect.

The fed's actions of the last few months have taken much of the risk out of the stock market. There's little perceived downside.

I'm not talking about people pulling out because it might be a bad investment. Many people dip into their retirement simply because they need cash.

A friend dipped into his 401k recently. The way it worked is that instead of taking money from the 401k directly, they issued him a loan for the amount he wanted with the 401k as collateral. They framed it as less tax liability for him but I'd wager the bigger reason was to prevent stock sell offs.

If that's happening at scale, then those 401k accounts are getting massive liabilities stacked up against them.. which falls apart if their value goes down.

401k backed loans are nothing new. The incentive is the avoidance of tax penalties (or less obtusely that's the disincentive at the federal level to just withdrawing). It's not to prevent stock sell-offs, it's to prevent people for whimsically withdrawing from their 401k/retirement account..

Nothing stops your friend from selling everything and leaving it as cash or some non-stock instrument in the account.

When you take out 401K loan, the plan sells equivalent amount of shares and gives you the cash. So it's still causing market sell off. As you pay it back the shares are bought again.

A mutual fund doesn't own specific shares of stocks on behalf of an individual - it's just one big pool of assets, and the individuals own shares of that pool, not the underlying securities.

So if there's still lots of cash coming in every month from new payroll deductions, there might be no need for the fund to sell stocks to pay out a loan. They'd just buy fewer stocks that month.

They'd only have to sell stocks if the total cash going out (loans, plus distributions to retirees) exceeded the total cash coming in (payroll deductions).

Q4 this year and Q1 next year just have to be bloodbaths this year - but then again, I'm literally always wrong about this stuff. It really seems like I should be right.

I say this because I think now that callbacks are starting slowly and lots of offices have said Sept - Oct time will when they 'open the office' again properly - the redundancies will be made before then - then belts tighten, budgets get slashed, spending goes way down due to layoffs - and then Q4 and following quarters will be abysmal.

I should probably buy calls on the S&P to be at record highs by year end instead though because we live in clown world now.

We live in weird times. I too am shocked and constantly shown wrong by the SP50 rising while many millions file unemployment.

I’ve read that part of the rise is from the Fed lower rates to 0. It essentially pushed banks to buy into the market for their only sources of interest.

I know from the past that company stock usually rises after they announce reorganization. Investors may be seeing opportunities for profit down the road from more optimized org charts following the mass unemployment.

I do believe Dr Fauci and other medical researchers comparing this to 1918. If past is precedent we will see a far worse outbreak and economic fallout in the fall and winter then we did this spring. If the valuation decrease were over pessimistic this time around then next time may be more muted. If the decrease prove to have been over optimistic then expect further devaluations next time. Both of those assuming rational actors and reactions, neither of which assured.

I also think we haven’t seen the full fallout from even the spring yet. I think we won’t know until the end of august how all of the unemployment affected rent and mortgage payments during the spring outbreak. We also don’t know whether the protests are going to spark super spreader events. That could necessitate closing the economy yet again and sooner. On the other side, we don’t have a monthly stimulus or cancelled obligations-those could have up or down impacts respectfully.

I see a lot of really grave uncertainty in the future right now. The pandemic is a very real thing. The protests are too. The political desires to stimulate the economy despite any other affects is perhaps greater still. So I think there’s lots of noise and uncertainty here-which makes for volatility in valuations.

Edit-I also just want to point out that the 1920s were marked by more than just Black Friday in October(date?). I’d suggest we all go back and refresh on how things played out back then to compare to today.

>but then again, I'm literally always wrong about this stuff.

Feel that. Story of every smart person who thinks the market should act logically

Assuming there are a bunch of institutional trading bots using machine learning, they are gonna learn to fleece retail investors. With that in mind it kinda makes sense that the market would often behave opposite to expectations.

Not sure why this is surprising as most people who are out of work don't have any equity in the stock market. I think it's more a reflection of income inequality and the concentration of capital. There is a huge disconnect indeed.

Yeah, completely agree - I was thinking about this when this rally first started after the steep drops, at which time there was a narrative on the financial news that things were less bad because there were less outflows from retail investors than in previous downturns. One commentator was arguing that this is because the public had finally learned the errors of their ways in attempting to time the market.

While I suppose it's possible that there may be some effect like this, I'm a bit suspicious of the idea that the outlook and risk tolerance of the typical retail investor could change that significantly.

It definitely left me wondering to what extent capital invested in the equity markets has continued to move away from being held by those who are likeliest to be out of work right now.

Until Congress starts looking reluctant to pass trillion dollar appropriations quarterly and the Fed stops buying assets in quantity. So, yeah, I wouldn't bet against this rally, except to hedge existing gains.

Yes. As long as the government continues to pour money into the top end of the wealth curve, those people will continue to put it in the market. Under the circumstances, there is certainly no rush to invest it into their businesses in the form of new jobs, or infrastructure projects. And they can't bank it, the interest rates are too low.

The market is still down ~10% from it's pre-COVID high.

And that peak was probably also aspirational at best. The SP500 has basically become the stock price manipulation hall of fame.

I think the point is that a worldwide pandemic, 40 million people unemployed, China annexing Hong Kong, and mass civil unrest should logically lead to far more of a downturn than merely 10% off all-time highs (which were already several standard deviations above long term price to earnings ratios).

Does it really though? Money doesn’t care about people. Why should that annexation be harmful for the market? Why do 40 million unemployed a dent? They’re not the ones spending money because this crisis hit bottom first.

This is what I am starting to suspect. From the Stock Market's perspective, the economic bottom 30% don't matter. They don't contribute much to the economy and whatever happens to them does not really matter to the Stock Market.

Pre-COVID, I would never have believed that.

Go back to the market activity during the Arab Spring. The market definitely does care about uncertainty RE trading partners and Hong Kong is a huge trading partner.

40 million unemployed domestically means lower demand for many businesses. Who will buy new cars (with debt), houses (with debt), consumer electronics, etc etc?

My most aggressive investment accounts reached new highs this week. There was money to be made going down (puts) and money to be made when things started bouncing back.

Stocks are rebounding globally, not just in the US markets, though are still down over 6 months.

Is this a reference to that old flash game?

https://duckduckgo.com/?q=kitten+cannon

No, it's a bump up in the stock prices before they fall again

https://www.investopedia.com/terms/d/deadcatbounce.asp

I think this is rich people telling you that retail (which is literally burning to the ground) doesn't matter. Poor people are burning down their own places of employment, but that's not going to be a big deal for the economy. Retail generally has tiny margins anyways and was slowly moving to be online. Now it's just moving faster. Bad for poor people who need jobs, good for stockholders and people who don't need low level retail jobs.

I thought they were expecting 8m (nonfarm payroll) job losses and saw 2.something in May instead.

https://www.cnbc.com/2020/06/03/adp-private-payrolls-may-202...

Here's the official chart for continuing claims that the article references. https://fred.stlouisfed.org/series/CCSA

The default chart does a good job of showing how severe this is.

Have to zoom in to the one year chart to get context around this week's rise.

> called back to work slowly What % would you guess are ever going to be ‘called back’?

The 8 weeks from when the first PPP loans started going out is about to elapse. Weird they don’t mention that at all.

The shut downs were a drastic overcorrection. I'll say it until I'm blue in the face. In retrospect, we will look at it as a dire mistake that triggered a great depression-like event.

Shutdowns worked elsewhere. What doesn't work is half a shutdown.

Proper countries put a testing-and-quarantine regime in place and have paid sick leave. Not the US, unfortunately.

What is shaping up to be an absolute catastrophe is the Black Lives Matter demonstrations all over the country. Would you consider talking to a contact tracer after you've been to a protest against the police? People will justifiably think it's one of those test-your-meth stunts that sheriffs at times pull. Well, now there's the blowback.

Even if you are willing to talk to a contact tracer, what good will it do? The vast majority of a protester's contacts would be from the protest. Under the best of circumstances, that is a black hole for contact tracing.

Not with the Apple/Google solution, because the phones in the crowd should be able to exchange keys with each other. But it hasn't been deployed yet.

Imagine someone was at a BLM demonstration, possibly did some light rioting (spraypainting, flyposting, damage to vehicles), and the following morning wakes up with respiratory symptoms and tests positive for coronaplague. Now the contact tracer calls. Anyone would think this is a sheriff's ruse, trying to find out what his circle of friends is.

Yeah, police really should have chosen a better time to murder someone on film and then have authorities ignore it for days. Protesters should go home to avoid spreading disease. They can resume protesting the next time an officer kills someone for the crime of having the wrong skin color. It will surely happen again soon.

In the absence of mandatory shutdowns, the general retail, hospitality, etc. sectors would have still seen collapses of at least 50% or more. Maybe it wouldn't have been quite so bad as the 80% that actually happened, but that kind of crash would absolutely wipe out the industry without government support.

The epidemiological curve in my state was exponential until roughly a week after the shutdown. If it had continued, then a couple weeks later we would have had more new cases per day than there are hospital beds in the state. What would you have proposed instead to keep our hospitals from completely filling like they did in Italy?

I would point to other states that never shut down, like Wyoming and South Dakota, and states with light shut downs, like TX or FL (which did far better than NY or NJ). They all followed the same curve. An enormous amount of the case load was from infected nursing homes. Meanwhile, what was the goal of shutting down beaches and parks? Just to spread misery and give people nowhere to go? To deprive people of essential vitamin D and exercise? Madness, all of it.

We shut down beaches and parks because we didn't know at the time the pattern of spreading. We had theories but we didn't have solid emperical evidence yet about how covid spread.

Also the difference between light and hard shutdowns isn't as much as you'd think. Especially when most people's behavior changes despite whether there is a lockdown or not.

“I’ll point to states not representative of other stares in density at all.”

Texas or Florida are representative of the density of the US. If the mass shut downs had been limited to NY and NJ, without the media working everyone into a frenzy about beach goers in Florida, people in those other states wouldn’t be so upset.

We’re not a single country. We’re 50 different states with vastly different requirements. NYC and NJ did need the extreme shut downs. In fact, they should have shut down earlier and harder. South Dakota, Texas, etc., did not. Many sparse states like Oregon overreacted and shut down more than they needed to.

Of course, nobody can predict these things. Mistakes happen. What drives me nuts is that the same media that flipped out because not all states were taking the drastic measures that were needed in NYC is going to peddle a narrative about what happened that totally glosses over the lesson that those states didn’t really need to take such drastic measures.

> Many sparse states like Oregon

Just like anywhere else, conditions inside a particular state are like conditions inside the whole country, i.e. not consistent and comparable. A large chunk of Oregon is practically empty. Then there is Portland, which has 60% of the entire population of the state.

Locking down Portland arguably made sense. Locking down rural Oregon not as much.

I can’t stress what a huge outlier the NYC/NJ area is. Portland has a population density 1/5 as much as NYC. It has half the population density of DC, which itself probably shut down more than it needed to.

But yes, locking down Portland was at least plausible. Locking down my wife’s mother in law down in Lincoln City, however, generated a lot of ill will to Governor Brown that I can’t say was undeserved.

I agree on all points. Ideologically I should agree with our governor, but I find that her response to the pandemic has been pretty awful. She's not alone, I suppose, it seems like many (most?) state governors were only qualified to hold their position in a time of peace, few seem to have stepped up to the challenge of the coronavirus and taken charge as leaders.

For the longest time we didn't have anything even approximating an actual metric for when we could reopen things, and then all of the sudden we just decided to go ahead with it. I think her hand got forced on that, because when everyone realizes you don't have a plan, they start to make their own.

Sorry for the politics. I just find the entire situation very frustrating.

Lincoln City from when I’ve been there had has a lot of tourists (I presume you meant your mother in law) compared to say Coos Bay and would hardly be that isolated

Lincoln City is pretty sparse until the summer! (I meant my wife's grandmother. Not even close!)

Comparing Wyoming and New York is disingenuous. You'd be wise to compare, say, New York Metro and the Bay Area, [1] two areas of the US that are arguably almost equal density.

Note how San Francisco declared a state of emergency in February. By the first week of March, most were working from home, and the week after, it had a shelter in place order.

1 - https://abc7news.com/feature/health/coronavirus-how-close-wa...

In my state it's not true that the majority of the case load is from infected nursing homes. Most of the deaths were in the beginning but the new cases and deaths are from the general populace.

Our beaches and parks have been open for weeks now. People have not been forced to stay indoors at all hours. Our governor's order has been exclusively focused on avoiding situations where two people from different households encounter each other for extended periods because that creates a vector from one household to the other. I've been walking outside the entire time we've been "under quarantine." There are runners and bikers and all kinds of people doing the same. The only difference is we give each other a wide berth on the trail.

I think you're blowing the scope of the "quarantines" out of proportion. And you didn't answer my original question. What would you have done differently? What would your plan have been?

Which state are you in?

Curves are exponential until they aren't. In most states, hospitals were never anywhere near being "overwhelmed", quite the opposite in fact. In my county (Santa Clara, CA), there are under 5% hospital beds occupied by Covid patients.

We shut down fairly hard and fairly early in Denmark. Our neighbour Sweden didn’t shut down at all. Their economy suffered roughly the same as ours, but the number of deaths per 100,000 population is 43.9 and ours is 10.

We’re pretty much reopening everything that isn’t big concentrated gatherings or night-clubs. Even things like Zoos are opening. Our border to Germany and Norway is also semi-open now, but remains closed toward Sweden for obvious reasons.

We did shut down in Sweden. It's a myth that needs to be debunked. I (and many others) have been working from home for several months now. All events (like sports, cinemas) have been postponed or canceled. Most people in larger cities are ordering groceries and stuffs online. Sweden is a very digital, even cashless society. Sure, it's open in some ways but many stores are shutting down because everything have went digital.

The net effect was that the death rate was vastly higher in Sweden than their northern Scandinavian neighbors. Over 4000 deaths more based on population size. Not having more aggressive stay at home policies doomed thousands more people to die than were likely if you had followed policies of your neighbors. Sweden has now joined the ranks of the worst performing countries in Europe based on death rate. The UK, France, Spain, and Sweden.

Here's the opportunity Sweden missed: The disease had an early outbreak in those other countries, it was already raging before the countries shutdown (Spain and Italy were overwhelmed). But as we saw in Finland, Norway etc, if it wasn't raging, by shutting down you could tremendously reduce the infections. I know Sweden tried to protect elderly in sr citizen homes as we call them in the US, but you failed. People could still go out to bars and restaurants, your economy was somewhat more functional that other countries, at the cost of currently 3-4k extra deaths.

It's a terrible situation, but in my opinion the wrong one.

Thank you for this.

We’re the shutdowns and working from home government mandated, or due to people just doing it?

Similar situation here in Czech Republic, just in the last few days most foreign travel restrictions were lifted for European Countries - but UK & Sweden are firmly red on the map the government has published, traveling there is not advised and you would have to go to a 14 day quarantine and get tested after returning from there.

Great depression was bad. 10 world wars 2 of u.s. deaths, also bad.

I think the lesson we'll learn is we should have locked down earlier, harder, and longer so we can start a full recovery faster.

Even though bars and restaurants are open, myself and every person I know is acting as if a lockdown is still in place. ( I know there are some people who are but there are lots of people who aren't)

There will be no fast recovery, period. We have deprived businesses of oxygen for 3 months. Cash flow is the life blood of businesses. We've sucked all the cash flow out of the worldwide economy. The bankruptcies will start rolling in and we will lose at least a decade of economic growth just to recover to where we were. 40+ million unemployed in the U.S. Near record levels. WWII caused 50+ million deaths. Are we on that track now? Hard to say. But I certainly fear worldwide economic instability more than I do Covid-19. My reading of history is that those events cause far more death and destruction than viruses. We know by now that Covid isn't the plague.

What level of disability or death would make you change your mind? 100k deaths seems a lot to me and how far through is the US now?

40% of those were nursing home deaths: https://heavy.com/news/2020/05/covid-19-deaths-nursing-homes...

Median age of Covid deaths? 75-84 years. https://data.cdc.gov/NCHS/Provisional-COVID-19-Death-Counts-...

This is on par with median age of death in the U.S. on any given year.

You cannot crush the future of your country to extend the life of the elderly by no statistically significant amount. I'm sorry, but that's the truth.

For 20-55 year olds, the core of the economy, this virus is not very deadly at all. This age group is far more likely to die from many other causes.

I would say, fix the nursing home problem. Ask the elderly to wear masks or shelter in place and to beef up on vitamin intake and anything else that would help their immune system.

Then, I would let the youth and young and middle aged adults continue life as normal, develop herd immunity, and therefore prevent a widespread infection next winter.

A far less cruel alternative would be to expand sick leave and to detatch health care from employment.

> expand sick leave and to detatch health care from employment.

It is probably possible to do this and aim for eradication. This is NZs plan. It’ll be interesting once the borders are unlocked.

It seems that the average number of years of life lost per covid death is about 10.

https://www.gla.ac.uk/news/coronavirus/headline_720672_en.ht...

U.S. deaths from world war 2 ~300,000

FWIW, around here the breweries were "full". (with full being defined as all available tables occupied. Obviously the number of available tables is less now than it was before)

I wonder what kind of an event losing 2-5% of the population to a pandemic would trigger.

US lost 1% of its population to Spanish flu which was shortly followed by the roaring twenties.

What was wrong about the shut downs is the arbitrary nature of them and inconsistent application from state to state. The same is occurring again with the lessening of restrictions.

We saw attempts by some governors and mayors to play political games with the shut downs by favoring certain business types over others when both had similar staffing concerns all to score points with one group or another and little to no concern with public health. We even had one governor ship sick people to elderly care homes!

A lot of this can be laid at the feet of the CDC, which Trump not withstanding and I really question his affect over the CDC, which fumbled the whole event and still does not manage it well.

However people need to realize, outside of war, the Federal Government of the US in not up to the task. They have fumbled natural distastes with the most recent famous one being Katrina but even subsequent disasters did not show much improvement.

To that end, what Congress should have been doing instead of trying to craft stimulus programs to benefit political buddies is run the CDC and FEMA through the ringer and start the process of building a coordinated process to follow for the duration of COVID19 as well as future issues. Instead they are all playing up for the November elections

What will triggers the great depression is the huge decline in consummation. It will be a month since the end of the lockdown here and my expense have been cut in more than half. I'm not the only one. I've repaired my bike and did not buy a new one for summer as intended, friends of mine did delay their new car (they don't need it as much now). working from home made people less afraid to cook for themselves and thus they are spending a lot less.

Restaurants opened this week and my sister told me it was so calm she was able to study during the service, and nobody said anything. If anything i spent 6 time more during the first month of the lockdown than the first month after the lift (500 vs 3K, not counting rent). I still have planned expenses but for my vacations, after fixing my wing, i will kitesurf around where i live and camp rather than go to the mediteranean. I assume most people like me will do the same.

This comportment, if widespread, will cause a great depression-like event. Still won't change.

> huge decline in consummation

If anything I think the lockdowns increased consummation.

I’d have to concur.

consummation - (1) The action of making a marriage or relationship complete by having sexual intercourse. (2) The point at which something is complete or finalized.

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