2020-11-16 Addendum

Addendum - Labor Market Fare:

 

I had already assembled a bunch of charts, but Nathan Tankus did us a favor with some related commentary:

What is the Future of Fiscal Policy Now That the Election is Over?

Fiscal Cliffication intensifies as the Fed Takes Center Stage

There are some overly rosy possible scenarios circulating financial twitter that make reviewing the unemployment situation important. Headline unemployment is still elevated but it is no longer at the high levels of the spring. However, this hides the damage that is happening underneath. Headline unemployment has mostly been driven by the behavior of temporary layoffs. Businesses laid people off because they had to shut down because of government order or they made discretionary decisions based on risk avoidant customers and their own risk judgments. The hope was that the virus would get under control and businesses could safely reopen. Instead, eventually businesses were reopened prematurely because of state and local government concerns over tax revenue combined with pressure to reopen from businesses who had inadequate (or no) federal fiscal support. We see this pattern in the temporary layoff data. There is a dramatic, unprecedented leep upwards and then a fall off- but temporary layoffs are still very elevated. But the real damage is in the permanent job losses.

The distinction between temporary layoffs and permanent job losses is very underemphasized in economic reporting and has led to the underlying economic damage from being missed in a lot of economics coverage. My colleagues Alex Williams and Skanda Amarnath at Employ America did a great job of making this point in their piece “The Shock and The Slog” last month. While there has been a lot of recovery in temporary layoffs, there has been a steady increase in permanent layoffs and it will likely keep on increasing as more businesses shutter and the effects of expanded benefits start filtering through the economy (and our economic data).

… This second wave of shutdowns will be more economically harmful than the first wave because any savings they had were exhausted by the first wave and it is most likely that most affected businesses have already exhausted their access to credit (and perhaps even their willingness to take on more debt). It’s likely that the second wave of shutdowns will accelerate permanent job losses while the temporary job losses generate renewed drops in demand. In other words, the economic situation has still been deteriorating and it will likely get hammered at a time where fiscal support is, at best, months away.

Some context; the following chart shows just up until the start of this year

Pre-crisis history – max 2.5mil in 1982; 1.9mil in Sept 2009:

now, here's that same chart again, but including this year... with a whole new scale on the vertical axis!

this year, peaked at 18 million!; still > 4.6 mil in Sept:

but that doesn't include people who are no longer classified as either employed nor as unemployed; they are Not In the Labor Force:

NILF = 99.87 mil in Oct, down from 104.07mil at peak, but still up from 95.39 in Feb

In GFC, # employed fell 8.6mil over 25mths, from 146.6mil in Nov 07 to 138.0mil in Dec 09; then took 57 months til Sep 2014 to recover to old peak; 

# employed of 158.8 in Dec 2019 fell 25.4mil to 133.4 in April; recovered so far to 149.8, still 9mil below peak:

Service occupations dropped from 26mil to 18mil and recovered 75%+ to 24mil;

management and professional, otoh, fell from 66.1 to 61.2, now at 63.3 (43% back)