What the California economy might look like by the time it is allowed to reopen. Photo of abandoned farm in North Dakota by James Ulvog.

Over the last several weeks I have accumulated a number of articles describing the economic and health damage caused by the government ordered shutdown of the economy.

I’ve been wanting to post these for a while. In light of the California government imposing more severe constraints on when the economy will be allowed to start functioning again, it is now time to publish.

Economic damage

7/30/20 – Wall Street Journal – US Economy Contracted at Record Rate last Quarter; Jobless Claims Rise to 1.43 million – The preliminary estimate of the collapse in the US economy for the second quarter came in at an annualized 32.9% drop. Again, that is annualized. In addition, it will be revised in each of the next two months as additional data is gathered by the feds.

That follows an annualized drop of 5% in the first quarter.

8/25/20 – CNBC – American Airlines to cut 19,000 jobs when federal aid expires in October – (more…)

Image courtesy of Adobe Stock.

I don’t have any word that can describe this disaster:

New unemployment claims for week ending 5/16/20 are just under 2.5 million, seasonally adjusted. An additional 2.2 million people who wouldn’t usually be qualified for unemployment filed during the week for Panemic Unemployment Assistance. The new PUA tally is shocking.

The tally of seasonally adjusted new claims is 38.6 million since the economy was put in an induced coma.

Data:

Weekly press release from the Department of labor: Unemployment insurance weekly claims

3/21/20– Wall Street Journal – Workers file 2.4 Million Unemployment Claims

Summary of new claims and running total

Here is my running tally of the new unemployment claims.

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2010 02 12 – 6169 – College Park – University of Maryland by thisisbossi is licensed under CC BY-SA 2.0

Lots of people are starting to make guesses on what the impact will be from the pandemic on different industries over the next few years. No guess is better than another, so here is some speculation for your consideration.

The longer the economy of major states stay closed by deliberate choice of multiple governors the worse the effect is going to be. At some point there will be a disproportionately compounding effect with every extra week.

Discussion in this post brings together speculation for

• higher education,
• retail, and
• airlines.

This discussion will be posted on several of my blogs.

Higher Education

A flood of articles are discussing damage to the higher education world. Eventually all colleges and universities will concede they have to refund something in the range of half a semester of room and board.

More institutions are getting pressure, if not getting served with litigation papers, to refund a portion of Spring 2020 tuition. Pressure is growing to discount tuition in the fall if classes are held online.

There is a growing probability there will be a severe impact over the next few years. One of many articles discussing the possibilities:

5/11/20 – New York Magazine/Intelligencer – The Coming Disruption/Scott Galloway predicts a handful of elite cyborg universities will soon monopolize higher education – One commentator perceives there has been a substantial drop in the value, price, and product of higher education.

(more…)

New York order sending people sick from coronavirus to nursing homes.

Multiple states, including New York, New Jersey, and Pennsylvania required nursing homes to admit or readmit people who were sick with COVID-19. A lot of articles have appeared describing the impact of these intentional policies.

In case you are like me and have a hard time believing reports that government officials would knowingly implement such policies, a copy of the New York order is provided above.

Just a small selection of the articles appearing of late:

5/13/20 – Newsweek – Pennsylvania Health Secretary moved mother out of nursing home as coronavirus death toll increased in state – The Health Secretary of Pennsylvania, Dr. Rachel Levine relocated her mother out of a care facility as the death tally of senior citizens in care facilities increased.

Pennsylvania is one of the states that ordered care facilities to admit people who were COVID-19 positive and thus contagious.

5/13/20 – Daily Wire – Some States Forced Nursing Homes To Accept Corona virus Patients. Many Died As A Result. This Is A Massive Scandal. – Pennsylvania, New Jersey, New York, and California all required that nursing homes take in people who were COVID-19 positive.

(more…)

Unemployment by Kevin Smith is licensed under CC BY 2.0

New unemployment claims for week ending 5/9/20 are just under three million, seasonally adjusted.

The tally of seasonally adjusted new claims is 36.5 million since the economy was put in an induced coma.

Data

Weekly press release from the Department of labor: Unemployment insurance weekly claims

3/14/20 – Wall Street Journal – Nearly 3 Million Jobless Benefits Last Week – Seasonally adjusted new claims for unemployment were 2.981M in the week ending May 3. That brings cumulative new claims to around 36.5M.

This discussion will be posted on several of my blogs.

Summary of new claims and running total

Here is my running tally of the new unemployment claims.

(more…)

For a number of years I have been tracking the monthly unemployment data. That information is shown in the graph above. Included is monthly information back to April 2010. Prior to that I only picked up a few data points.

This graph shows the hit from the Great Recession and the painfully slow recovery which followed.

This discussion will be posted on several of my blogs.

Six different ways to measure unemployment

There are actually six different ways to calculated labor underutilization, all provided by the US Bureau of Labor Statistics. The economic devastation caused by the shutdown of the US economy means we need to start looking at these different indicators.

The above graph shows what is referred to as the U-3 and U-6 rates.

“What in the world are you talking about,” I hear you ask.

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Unemployment Rate by EpicTop10.com is licensed under CC BY 2.0

Shutting down the economy has predictable, expected consequences. One that became visible on Friday was 20 million jobs vaporizing in the last month which resulted in an expected soaring unemployment rate.

A ban on everything other than immediate emergency medical care has cratered revenue of hospitals bringing layoffs to the entire industry.

Finally, making unemployment benefits higher than the earning capacity of a large portion of people has the fully expected consequence of making people hesitant to return to work.

This discussion will be posted across several of my blogs.

5/8/20 – Wall Street Journal – April Unemployment Rate Rose to a Record 14.7% – Thirty-three million people filing a first-time claim for unemployment drove the unemployment rate to 14.7%. Oh, lots of those new claims were filed after the cutoff for the April calculations.

A staggering 20.5 million jobs disappeared. Article points out the number of jobs destroyed are equal to all the job gains over the last decade.

Picture it this way – that is the equivalent of everybody who found a job over the last decade getting laid off.

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