The Bitter Truth

| May 22, 2020

 

 

There is some speculation that long-term unemployment may become a permanent thing. It is already exceeding 25%, which is higher than previously expected and reported, and some companies have already announced how many people they are laying off.

https://www.forbes.com/sites/terinaallen/2020/05/10/3-bitter-truths-about-the-coronavirus-job-losses-and-the-economy/#4426d77267f9

The article linked is by Terina Allen for Forbes. In it, she asks if people are ready to accept what she terms “The Three Bitter Truths”.

“Despite the rosy scenarios, research and data clearly indicate that (1) a huge portion of the job losses are indeed permanent; (2) the coronavirus recession—arguably a depression—will last much longer than many are prepared to admit; and (3) the unemployment numbers are actually higher than currently reported. According the news reports, in some places, people are registering properly and following all the guidelines, but are still not receiving unemployment compensation.

“For example: If 42% of the coronavirus job losses really do end up being permanent, this would be a devastating blow for the unemployed and for the economy. Given that 33.5 million people have filed new jobless claims so far, it stands to reason that approximately 14 million people could end up not having a job to return to at all.” – article

Link to Becker Friedman Institute’s report:

https://bfi.uchicago.edu/wp-content/uploads/BFI_WP_202059.pdf

I’ve said several times that two financial analysts have, since early in March, been forecasting a recession for 2021 to 2022, and now, others are saying the same thing, with some indicating that it may go as far down the road as 2023.  We’ve already been through several bad recessions: one quite memorable event was Nixon’s recession, which he didn’t really cause but still has that association. Another was the recession and the Great Depression that followed the markets crash in 1929. And the most recent was the Great Recession 2008-2009, which was caused partly by questionable mortgage financing practices and partly by the sheer greed involved in the Enron/Arthur Andersen accounting fraud, among other things. What can only be termed an economics cascade effect occurs when something disrupts the flow of business, and it just goes from there. The day that the stock market crashed in 1929 was the day that housing construction came to a grinding halt. When Arthur Andersen’s employees not involved in the Enron fraud were turfed out to the street, the effect of that fraud began to include all aspects of the economy, from car sales to grocery bills. This current recession, with job losses that may become permanent, may stretch as far as 2023.

I don’t view throwing money at people to keep them quiet as something even the Good Idea Fairy would view as practical. I’d like to see work that we’ve exported to other countries – e.g., China – brought back here. We have plenty of skilled labor, and people come here looking for jobs. If we now have a jobless population of more than 33 millions, and it is growing*, it might be wise to bring all that work back home.

*Update 5/22/2020: the number of applicants for unemployment compensation now stands at 38.6 million, as of Thursday.

Category: China, Coronavirus, Economy

Comments (10)

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  1. Roh-Dog says:

    Re housing and the Great Asset Bubble the tax structure backstopped by the Fed hath created, the correction in housing prices is going to knock the stuffing out of a lot of people’s ‘number one asset’, their house.
    One of two things in going to happen, or a blend:
    1) housing will adjust down to meet the historical average, and most likely due to momentum, crash through the historic average.
    2) gold and other limited-quantity assets will rise in value in relation to artificially propped up assets (or in this case, housing imho is a liability. Cars depreciate but houses don’t? Really?)
    My US Mint issued copper-clad zinc wafer, quantity: 2 – the blend is the most likely affect of misapplication and misallocations.
    What the future is, obviously, no one knows. Yet, there is a high probability of a catastrophic loss of GDP in the >50% range which would put us in the Greatest Depression.
    I don’t want to leave anyone in a funk so: the liquor stores are still open and Ol’ Glory still waves.
    https://sdbullion.com/blog/gold-vs-home-prices

  2. E4 Mafia '83-'87 says:

    Its very sad that millions of Americans are out of work. What is even more sad is that one politcal party **cough…Democrats…cough** are saying the country needs to stay “closed” and their talking heads on The DNC Propaganda Networks (they still have jobs) are trying to everyone else to stay home…don’t work…Joe Biden is Joe Biden…he sells out to whom ever will pay him the most…don’t wory about his senility…Orange Man Bad…of course the Obama regign didn’t spy on Trump’s campaign…unicorns are real.

  3. 5th/77th FA says:

    Y’all probably getting tired of hearing me say this, but here it is…again! The Chinese Communists, aided and abetted by the domestic enemies of our Republic, have make a real good start on what the domestic enemies were not able to accomplish. ie; The destruction of our economy in order to bring down Trump. So much evidence has been brought out in the last week or so, documenting the Deep State’s attempts for a coup/overthrow of the duly elected President, and now, more and more people are seeing this “Scam-demic” for what it truly is. Not control of a nasty bug as much as control of the people. The malicious murder of old folks in certain states, the pushing of freedom reducing restrictions on life in general. The Kongress Kritter Klowns are throwing out just enough Free Sh^t money to keep the masses semi happy and are promising more to come. The mail in ballot thing will allow them to steal more ballots and help to maintain their grip on power. Nobody noticed the tens of thousands of dollars raises that the Kongress Kritter Klowns gave themselves while they sent pennies to others. Saw a blurb where it stated 80% of the people would be content to just get a gubmint check v work for a living. Which we all know about lies, damn lies, and statistics. Many of the “unemployed” are drawing more, right now, with their unemployment and the added gubmit stipend than their regular paycheck.

    It’s odd how many of the companies being shut down are independents and others are getting fat off of the profits of being open because they are “essential.” 8 states have no lockdown in place and have the overall lowest rates of effects from all of this. The Chinese Communist bug will kill you in a church, a bar, an eating establishment, and a barber shop/hair salon, yet it won’t get to you in a Walmart, Lowes/Home Depot, or from working in an Amazon Warehouse. It also doesn’t affect take out foods.

    If we don’t open our economy soon, a lot of those business, as you stated, will NOT be around, or will NOT be replaced by others. I agree 1000% on bringing back ALL of the jobs that we can, or at the very least, taking it back from China. If there is any good news out of all of this, hopefully, there is enough disgust of what the gubmint has done that the true Patriots of this Country will rise up and vote in a massive change of elected officials, at all levels, and across all party lines. Vote in ones who actually care about the Nation and not about lining their pockets and/or maintaining a grip on power.

    Thanks Ex…Rant over…for now!

  4. Wilted Willy says:

    I totally agree, bring back all of that manufacturing back home! Can you imagine what would happen if we actually got into a war???
    Who the fuck would make our ammunition, China??
    Who would build our tanks and artillery, China???
    Not to mention who we would get to fight it for us, it sure as fuck wouldn’t be our sweet young boys we have today>>I don’t think you could get one of these pussies to even pick up a long scary black rifle???
    But Thank God, this is Friday of a 3 day weekend, the liquor stores are open and I have lots of ice!!!
    Long May She Wave!!!!!!!!!

    • 2banana says:

      America is fairly self sufficient in production of military equipment, ammo, food and energy.

  5. 2banana says:

    We never left the 2009 recession.

    It was only papered over.

    None of the underlying causes was rectified.

    • Roh-Dog says:

      Three simple sentences.

      100% truth.

      Worth a multitude more than a $1200 Y.O.Y. (You Owe Yourself).

  6. Thunderstixx says:

    Economists are never any good at predicting future financial trends than any given weatherman/woman is at predicting the weather for longer than the next twenty minutes or so…
    What I am seeing out there in the world is a country dying to get the fuck out of the basement and get back to doing the things that keep us and our country alive.
    There will be Covid parties that will have the “Nattering nabobs of negativism” chattering about gloom and doom and they too will be proven wrong yet again.
    America is ALIVE !!!
    Get out there and enjoy her.
    It’s a great time to be alive !!!
    New business will spring up out of this mess doing all sorts of things that we cannot imagine.
    Have faith my friends, have faith !!!

  7. Jan K. says:

    I’m with Thunderstixx (and I actually have studied economics, in some depth and detail).

    Economics is not a game of numbers. It’s a game of people – and what people want to do, and how their motivations relate to their opportunities.

    If you have a nation of discouraged people with no opportunity beyond wandering down the the corner for an extended game of kick-the-can, then you will have trouble getting your economy out of the doldrums. (Citation: postwar England, AKA Miserable Britain).

    If you have people who are raring to go, but whose options are constrained, then you have something like the last recession. It took a while for folks to dust off their hands and get busy, but once things were sufficiently uncorked at the government level, it took off, and hard.

    I won’t bother getting into the nitty-gritty of monetary economics (who here needs a sleep aid?) but there are a lot of people who want to get right back to work, and will do so with a passion once they get the chance. And you know what? A bunch of them will start new businesses. If (and this is a big if) the government is smart enough to support those people, we could well see a big economic surge.

    But I admit that it looks to me as if the left wing of the government is determined to drag things out for reasons that have more to do with partisan politics than with science. I surmise that their thinking is that a tanked economy will support Biden’s hopes, while I rather suspect that they won’t be able to do it that long, so that by the time it comes round to the election, we might have vaccinations widely available, and employers opening their doors to business.

    Between a failed impeachment, miscalculations on epidemic response and nominating Joe “I don’t work for you!” Biden, I am coming to the conclusion that the democratic party understands winning the same way that Charlie Sheen does.

  8. 11B-Mailclerk says:

    Minority employment and success was soaring. Black support for Trump was looking to hit 30%.

    That is the end of the Donks as a viable party.

    They -had- to wreck that, or go down in flames. -this- is how hard they scheme to keep folks on the plantation.

    Might not work.

    All this damage futile for fighting ChiCom Coof, and maybe futile for driving minorities back into the Donk plantation.

    “Dem-panic” is all too accurate a name.