One Number

Last week Thursday, just like every Thursday (except for certain holidays) the new claims for unemployment number came out. It was 1.4 million. It seems that during the last three weeks the number has plateaued in the 1.3 to 1.4 million range. That, and a little prudent projection, says a lot. Let’s explore.

While the administration and their punchline of jokes economic advisors may claim victory, let’s put this in perspective. In a normal week there are about 250,000 new unemployment claims. That means at the current “low plateau” there are over five times as many new unemployment claims as during the “old normal”. While it may be an improvement over the Trump Depression’s previous weeks there is no way you can portray this as a good number!

Now let’s project just a bit. I see no reason to assume this number is getting back in the 250,000 per week range anywhere in the near future. The administration’s plan to reduce unemployment appears to be the effort fronted by spokeswoman, first daughter and Senior Advisor Ivanka Trump: Find another job. In other words, they don’t have a plan.

The pandemic is worsening in recent weeks in America primarily due to the premature reopening of the economy at the urging of the White House. As it worsens the only logical choice is to shut it back down again which will lead to an economic contraction and more unemployment (in many cases the workers who were previously sent home will be sent home again.)

As bad as the economy has gotten two things prevented it from being much worse: the federal unemployment compensation supplement and the stimulus checks. A repeat/continuation of neither appears to be on the immediate horizon. I expect some sort of federal unemployment compensation supplement to pass in the next week or so, but indications are that it will be of a lower amount. We can debate (and I see valid points on both sides of the argument) the wisdom of $600 across the board but any way you slice it if you reduce the amount you reduce consumer demand (which is 70% of the demand factor in the American economy.)

As to a second round of stimulus checks I see that happening closer to the election and somehow they will have Trump’s name on them again. Trump has a history of spending other people’s money and making it appear it was his. He did it last time during the first round and it would be foolish to assume he would do anything differently in a second round. While it won’t fool the majority, Trump plays to the lowest common denominator and I can see Bubba arguing it came from Trump, “Hell, the check had his name on it didn’t it?”

When the best you can do is five times worse than normal this number tells me that despite the happy talk coming out of the administration the economy, like the virus, is going to get worse before it gets better. This plateau is just the floor of the valley. Weekly new unemployment claims, not the economy, will have a V shaped “recovery”.

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One thought on “One Number”

  1. I was pleased yesterday to hear Nancy Pelosi using her version of a cliche I have been using for decades…to wit: Wealth does NOT “trickle-down”…wealth “bubbles-up”.

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