[stupandaus]

Building on my analysis from last week:

1. This week's 6.6M new jobless claims represents ~4% of the estimated ~160-165M US Workforce.

2. This is incremental to the 3.3M new jobless claims filed week ending 3/21, totaling ~10M total jobless claims in the past 2 weeks.

3. The US unemployment rate was ~3.5% as of EOM February [1], so cumulatively that means we've hit ~10% unemployment as of EOW 3/28 (~10M incremental jobless claims = ~6%). That number is likely low and continuing to increase, as new jobless claims do not account for gig workers and many state unemployment sites have been inundated by these claims resulting in site crashes and people unable to file claims. In addition, layoffs have almost certainly continued between 3/28 and today.

4. The consensus estimate for this week's jobless claims was ~3.76M jobless claims, and the 6.6M actual claims blow the consensus estimate out of the water. That said, some analysts such as Goldman Sachs had estimated ~5.5M joblesss claims. Goldman Sachs estimates that unemployment will peak at ~15%. [2]

[1] https://data.bls.gov/timeseries/LNS14000000

[2] https://www.cnbc.com/2020/03/31/coronavirus-update-goldman-s...

[airstrike]

I'm also hearing this morning that we've hit the 10% mark. I also heard the same economist say "The economy is collapsing, and it's a global collapse". I don't even need coffee to be alert the rest of the day...

[mehrdadn]

Would you have a link to more reading from that economist about this?

[airstrike]

Not really, sadly. I just heard him on an internal conference call we have twice a week, so don't really have a link to provide but don't think he's published his views in writing just yet. I expect a lot of similar predictions to come out now that the unemployment claims number is out (as of ~1 hour ago)

For general views of very smart people on the economy and markets, I recommend Bloomberg Surveillance every morning on the Bloomberg app, radio and on your favorite podcast app

[mehrdadn]

Ah I see, okay thank you.

[wayoutthere]

This kind of info usually circulates in the corporate world for a week before it hits the wider media zeitgeist. My company has been holding weekly analyst briefings on what to expect.

Right now, the sources I have say to expect to be WFH and "socially distanced" until July or August at the earliest. Restaurants will probably start slowly opening back up around then, but conferences or sporting events are going to be cancelled through at least the end of the year. A single sporting event or conference can lead to thousands of new infections, so none of that stuff is coming back for a long time.

Past that, we were told to expect 3 waves of economic pain: one right now when everyone loses their job, another big layoff cycle in 3 months once companies that can WFH start to adjust for structural changes, and a third wave near the end of the year after people start to seriously curtail consumption in response to the first two waves and global demand falls off a cliff.

This information has been getting priced into the market for a few weeks, so none of it is new. But these numbers are just starting to hit the wider media and your average American is starting to panic because we're looking at a decade or more of hurt before this is all over.

[dataflow]

Great info (and scary), thank you. Is this based on assumptions that have a decent potential to not hold true, like e.g. lack of vaccines and adequate testing? Or does this assume those will happen in the next (say) ~year? And would you know if there are predictions on whether e.g. housing prices might fall?

[grey-area]

I'm more pessimistic in the short term than this (particularly for the US, which still doesn't have a national lockdown), but more optimistic in the long term.

Despite our best efforts, this thing is burning through entire populations, and will do so quickly (within a couple of months globally, except some places in asia who escaped the first wave but are now seeing more). Every active person leaving home is going to be exposed in short order, thus infecting their household, and even in lockdowns people need to eat. Almost every country waited too long to lock down, and large countries still haven't effectively done so.

The downside of that is a horrific global death toll (1 million confirmed cases this month, maybe 10 million infected? megadeath next month?). The upside is that we will at some point reach herd immunity and/or develop and manufacture a vaccine and economies will restart.

Looking at Italy I find it hard to believe that almost every household has not been exposed by now - all it takes is one infected during the lockdown and the entire household gets it. Their new cases are declining and their deaths are flat already.

There will be substantial economic damage but I think the recovery may be quite fast as there will be a clear cause which has been addressed (probably by a rushed vaccine currently in trials - there are lots globally). I don't believe a lockdown of more than 2 months is acceptable to most, even with a 1% risk of death, and such lockdowns require the consent of the population to function.

[TeMPOraL]

Any speculations on how bad is this going to get? Should I stock up on TP, on food, or on vodka and ammo?

[gwd]

Remember that 100 years ago, and then again 80 years ago, large percentages of men in Europe were removed from their own countries and sent somewhere else; ships transporting food and supplies were actively sunk, houses and factories were bombed to smithereens. In spite of the massive economic damage that caused, civilization did not descend into anarchy, and very few people who weren't prisoners starved to death.

COVID-19 isn't going to destroy any of our infrastructure, and if we mobilize properly, isn't going to kill nearly as many people. If our [great-]grandparents made it through WWII, there's no reason we can't make it through this.

[rckoepke]

>very few people who weren't prisoners starved to death [during WWII].

If it's relevant, 3 million people in India died due to widespread starvation during World War 2 caused by British colonial and war-time policies. Additionally all their cloth production was used by the British war effort, so many Indians went without clothes during that period. https://en.wikipedia.org/wiki/Bengal_famine_of_1943#Cloth_fa...

[gwd]

Right, I remember listening to an episode of Revisionist History about that [1]. Outrageous and shameful.

I'd have to listen to the episode again, but I think the most outrageous and shameful thing about it is that it wasn't actually necessary. The way Gladwell portrays it, they died mostly due to the personal spite of one person.

[1] http://revisionisthistory.com/episodes/15-the-prime-minister...

[generalpass]

> Remember that 100 years ago, and then again 80 years ago, large percentages of men in Europe were removed from their own countries and sent somewhere else; ships transporting food and supplies were actively sunk, houses and factories were bombed to smithereens. In spite of the massive economic damage that caused, civilization did not descend into anarchy, and very few people who weren't prisoners starved to death.

> COVID-19 isn't going to destroy any of our infrastructure, and if we mobilize properly, isn't going to kill nearly as many people. If our [great-]grandparents made it through WWII, there's no reason we can't make it through this.

In The U.S., WWII was funded by the savings of that generation, which is really amazing considering they had been in the longest, deepest economic depression in the nation's history prior to the start of the war.

After the war ended, cooler heads prevailed and all wartime orders were lifted and capital and labor could reform, as it saw fit, and as such, the year immediately following the war produced the greatest annualized economic gains in the history of the country.

Going into what we are doing right now, Americans don't have any savings plus many private and nearly all public institutions have a lot of debt.

There is no indication that the government will permit such a freely flowing economy even after whatever it is we are doing has ended, so I don't find direct comparisons relevant.

[kazen44]

> After the war ended, cooler heads prevailed and all wartime orders were lifted and capital and labor could reform, as it saw fit, and as such, the year immediately following the war produced the greatest annualized economic gains in the history of the country

the reason the US was ably to basically jump start it's economy after ww2 was mainly because all of its competitors got either got their industries and cities literally leveled, or their nation/people nearly utterly destroyed.

Even the UK, which was a victor of world war 2 had an economy which was basically dead in the water until the late 70's.

The US got incredibly "lucky" during world war 2 in the sense that it didn't fight the conflict on its own continent.

Also, the marshall plan was a smart policy in an economic sense because it allowed the war economy to transistion back into civilian goods thanks to having a massive (subsidized) export market.

[generalpass]

> > After the war ended, cooler heads prevailed and all wartime orders were lifted and capital and labor could reform, as it saw fit, and as such, the year immediately following the war produced the greatest annualized economic gains in the history of the country

> the reason the US was ably to basically jump start it's economy after ww2 was mainly because all of its competitors got either got their industries and cities literally leveled, or their nation/people nearly utterly destroyed.

> Even the UK, which was a victor of world war 2 had an economy which was basically dead in the water until the late 70's.

> The US got incredibly "lucky" during world war 2 in the sense that it didn't fight the conflict on its own continent.

> Also, the marshall plan was a smart policy in an economic sense because it allowed the war economy to transistion back into civilian goods thanks to having a massive (subsidized) export market.

Nations are not competitors. They are trade partners.

The Marshall Plan was passed in 1948.

[s1artibartfast]

Do you have any sources that compare government and private savings at the two time points? I am surprised by your claim that savings were higher at the height of the great depression

[generalpass]

> Do you have any sources that compare government and private savings at the two time points? I am surprised by your claim that savings were higher at the height of the great depression

Not immediately, but the U.S. was on a gold standard at the time and funded the war through war bonds (and establishment of income taxes) which were largely purchased domestically.

The gold standard bit is important because the government was not able to simply print money to fund the war.

[hoorayimhelping]

You know those signs we memed the hell out of last decade? They're so cliched that they don't mean anything anymore, but think of those.

    Keep calm and carry on

You should relax. We're not the first humans to see some hardship. Everything isn't going to fall apart because the economy has a downturn. Society isn't going to collapse because of this. It didn't happen in the 1600s, nor the 1700s, nor the 1800s, nor the 1900s. It's not going to happen in the 2000s.

Two global wars, the use of nuclear weapons, and a 50 year cold war with the ever present threat of nuclear apocalypse didn't cause society to break down last century, a flu won't cause it to fall apart this century either.

[digitaltrees]

While all of that is true, it can be very painful for most people. These types of events almost invariably lead to social unrest which compounds the problem. Ambitious and unscrupulous leaders in government and businesses will use this to undermine many of the norms we take for granted.

What is clear is that people are underestimating this crisis, no one wants to think we are in a WWII level moment, and so we don’t activate the appropriate level of response. But it is and will be a world altering period.

Once consistent pattern is that countries seem to feel like you do, it’s just a flu, then doctors see patients gasping for breath and literally drowning as their lungs fill up with fluid, and the true dread sets in. My friend is a doctor in NYC. She said this feels like war, and the nature of death experienced by people is horrific. If people were bleeding from their eyeballs like a movie maybe that would capture people’s attention but on the front lines people are terrified because this is an awful awful way to die.

[skrtskrt]

Hopefully we have the chance to undermine the horrific norm of employer-based private healthcare in the US

[GuiA]

I agree with you, but still would like to point out that the same line of argument (we’ve been fine before) would be as valid if society were to actually collapse. No species has ever gone extinct before... until it does!

[jasonv]

So you're saying -- if things now return to conditions that were present during "Two global wars, the use of nuclear weapons" of last century... no cause for alarm?

[closeparen]

Civilization can withstand alarming situations.

[jasonv]

Civilization can; personally... I'm somewhat concerned about my next (and possibly last) 20-30 years.

[7777fps]

This isn't a flu. Stop repeating misinformation.

[meddlepal]

You know what he means, don't be pedantic.

[7777fps]

It's not pedantic, a lot of people will die because people were saying, "It's just a flu" and not properly preparing or isolating.

[baron_harkonnen]

> Keep calm and carry on

You know that that meme originated from a campaign designed by the British government for motivation in the face of mass bombing anticipated in England before the onset of WWII right? I think saying that "this won't be any worse than being bombed by nazis" is not a particularly motivated slogan.

> a flu won't cause it to fall apart this century either.

If you think this is just a freak thing that is happening, som e flu what will pass, then you don't understand what is happening. What we're seeing is the way this pandemic is exposing vulnerabilities in our global capitalist system.

And finally, plenty of societies of collapse in those time periods. Of course humans and societies continue to exist, but there are more an enough examples of societies that have ceases to exist and the transition is a painful process.

[ubercow13]

It's actually way more ironic than that. It's traced back to the public stance of the British government during the spanish flu pandemic in WW1, where they decided that keeping the economy going was more important than trying to slow the spread of the flu.

"According to Dr Honigsbaum, the “carry on” advice may well have been responsible for thousands of the 250,000 Britons who ultimately died in the Spanish flu pandemic."

https://www.telegraph.co.uk/health-fitness/body/coronavirus-...

[airstrike]

The irony is almost palpable! Thank you for sharing this.

[Retric]

While many people will likely get very sick, they only stay that way for ~2-6 weeks. Further, around half of people below 50 will show minimal if any symptoms. So, while most non essential jobs are shut down we are likely to see a surplus of labor in terms of trucking etc.

My guess is plenty of essential jobs will have heavy overtime while many people are unemployed. Simply because the disruptions are going to cascade through individual factories very quickly. The economic impact is largely going to be a question of how much do we shut down to save lives?

[chasd00]

"The economic impact is largely going to be a question of how much do we shut down to save lives?"

i think about that a lot. I have so much respect for the task force setup to work on this, but man, i'm glad i'm not on it.

[tmountain]

That thinking negates the economic impact that a bunch of people dying is going to have on the economy. There are really two options here.

1) A huge impact on the economy and fewer people die.

2) A huge impact on the economy and lots of people die.

Nobody has the capability to predict the real outcome of one scenario over the other from an economic perspective.

If the US does everything perfectly, we'll probably lose 200k people to COVID-19. If we "reopen the economy" prematurely, the number could easily be 5x to 10x that figure.

Loss of human life has a very tangible impact on the economy, so folks should not be thinking of this as a binary decision ("do we save lives vs do we save the economy").

[Retric]

That’s incredibly simplified. Policy makers don’t have a simple switch to which results in some specific known outcome. Nobody wants millions of Americans to die or for another outbreak to happen in 6+ months. Unfortunately, avoiding both without shutting everything down until a vaccine is developed is tricky.

[withinboredom]

> around half of people below 50 will show minimal if any symptoms.

I have a middle finger for you for how cold hearted you sound. As though “it’s no big deal”. My wife went through this (previously healthy 34 year old) and it was terrible. The docs just said: “there’s nothing more we can do”

[monktastic1]

I'm sorry for what you're going through. Maybe reading a thread on the economic implications of this disaster -- which will inevitably discuss both the terrible parts and the silver linings -- isn't the healthiest thing for you right now?

[marnett]

Unfortunately in mitigating a national crisis it is a balance - and largely a dehumanized balance where everyone is diminished to a statistic.

[yutyut]

How is your wife now? Sorry if that’s too personal.

[withinboredom]

She's doing better now, thanks for asking! She's still got a bit of a cough, but will almost surely make a 100% recovery.

[techdevangelist]

The three A’s of the apocalypse; ammo, alcohol and antibiotics..

[samstave]

Four A's: AU

[airstrike]

"Forecasting is hard, especially when it's about the future"

Whether or not you need ammo probably depends on where you live... but I'd stock up on non-perishables and necessities if you can afford it.

Not sure you need vodka at all, but I think that's a matter of personal preference. I'm actually trying to be as healthy and fit as possible to fight the weirdness that is self-isolation and to be ready for the virus when it inevitably comes (if 80% of us really are going to be infected...)

Am also hearing PE funds are forecasting anything between "18 months until we're back to normal" to "it will never be the same"..

[TeMPOraL]

The vodka and ammo was a bit of the joke (though I think the saying goes that post-apocalypse currency is fuel, ammo and cigarettes).

I've stocked up a month ago for a minor supply chain disruption. But the more I read the news every day, the more it seems to me that it isn't going to be a minor disruption. I'm starting to worry about survival even if neither myself nor anyone around me actually catches COVID-19.

[EdwardDiego]

What are you going to shoot? Food or people?

[commandlinefan]

Technically that's not an either/or, you know.

[EdwardDiego]

For now, I'm hoping it's an xor.

[Frost1x]

If you're a cannibal, things just got complicated.

[heavenlyblue]

Right, either shoot people or animals. Shooting both groups may be a recipe for total loneliness.

[pjc50]

Definitely stockpile TP and food, if you're in an area where the shelves haven't been stripped already. But don't overdo it and leave none for others.

(UK already into "one large pack of TP per customer" territory, which is an improvement from bare shelves)

[commandlinefan]

Where I live, there's a sign that says "limit 1 per customer" in front of a shelf that's been completely empty for over two weeks now.

[vonmoltke]

Yeah, anecdotal reports here are that stores sell out of TP within hours of opening after a restock in spite of quantity limits.

[standardUser]

Stockpiling has caused absolutely nothing but problems.

[toomuchtodo]

Food, non-perishables, fuel? Yes. Firearms and ammo? To each their own. We did, but we're more rural.

Our concern is a supply chain meltdown when you have millions infected and sick. I would rather be prepared and not need something, then need something and not be prepared.

[MiroF]

> Our concern is a supply chain meltdown when you have millions infected and sick.

This is an absurdist prediction - we are looking at maximum 2 million 75+ year olds dying with some much smaller number of people of different ages. This is the group least likely to be involved in the day-to-day functioning of our supply chains.

Honestly, where are people coming up with these doomsday predictions?

[TeMPOraL]

Have you watched the supply chains? Spikes in demand followed by demand collapse have already wreaked havoc. From what I read from people from that business, there's total chaos.

And even if the elderly bear most of the risk, countries are shutting down completely for their sake - and that means companies stopping operations, leading to further disruptions. Also this article: US already has 10 million unemployed, and it barely started to consider doing anything about the virus.

I think this is closest to actual doomsday since the peak of Cold War.

[Frost1x]

If you were to value all human lives equally, the Cold War potential threat was far greater than this. The actual realized causality count is of course orders of magnitude lower for the Cold War.

In terms of being an existential threat to human life, this virus as we currently understand it (ignoring all the unknowns) isn't a real Doomsday. Historically it's merely a blip on the radar of awful things humanity has went through, endured, and survived leading to where we are now. People survived the bubonic plague and continued on. It was awful and they lacked much of the knowledge and understanding we now have to better curb these threats.

The vast majority of the population is going to be fine, healthy, and moving along. There may be economic restructuring after this (I don't see it as likely though). You're probably going to see a drop in quality/standard of living at large no matter what, but the majority of our infrastructure will still be there and the majority of the people who operate it will still be there. It's not like humans won't be around, infrastructure will be destroyed, our acquired knowledge and skills are lost...

The absolute worst case scenario is that this virus mutates regularly (perhaps with higher mortality rates) and we aren't able to manage it. Each mutation comes with significant risk of death. Although the risk could low for many, multiple exposures to relatively low risk leads to higher more realized unwelcome outcomes. This would absolutely force a complete systematic restructuring of societies, how we interact, how we work, etc. long term.

Based on what we currently know this will be a fairly long decline in productivity that most will be immune to and life will probably continue on mostly as is. It all boils down to questions about who deserves what, who takes the hit on losses, etc. Right now it looks like your average US citizen will see a larger decline in standards of living and our economic system will further consolidate/concentrate wealth and power barring some sort of (hopefully non-violent) social revolution.

[throwanem]

As isolation habits go, it's slightly safer to overindulge in news than in liquor, but not much less unhealthy.

If you're worried about a real collapse, then do what you can to prepare, sure - ideally remembering that, by all the accounts of people who've been through such collapses and later told the tale, what really gets you through in the long run isn't liquor, smokes, or bullets, but relationships.

You don't need to soak in the news to do that. Indeed, soaking in the news probably makes it harder. Anxiety can get paralyzing, and there's a lot in the news to be anxious about. But it's also worth remembering that what's going to happen is going to happen whether you obsess over it or not. It can't be hurried, helped, or fought. It can only be dealt with as best you can, and from here it seems like you're not really helping yourself by what you're doing just now. So, maybe consider trying doing something else for a while? You know, just to see if it feels any different.

[MiroF]

For food, fuel, and other essentials? If stuff like that starts getting disrupted to the point that people are actually dying, you can bet that we are going to lift our shelter-in-place. I have seen no evidence of that being borne out at all.

> I think this is closest to actual doomsday since the peak of Cold War

I agree, but I think that more speaks to the relative safety and stability of the post-Cold War era than any particularly huge danger from the pandemic. 2 million deaths is terrifying and we should do what we can to prevent it - I don't see any evidence that this is the lead up to general societal collapse or even substantial supply chain disruption for things you need to survive.

[digitaltrees]

Because countries are shutting their borders and we have a tightly coupled network. Add to that decades of streamlining logistics to avoid any inventory and consistent dividends and stock buy backs that make scaling up additional capacity difficult and you can quickly see disruption.

If this triggers a financial crisis, then working capital can disappear so even if capacity exists liquidity won’t and there won’t be enough purchase power to float inventory.

I worked at the best corporate bankruptcy law firm in the country in 2008. I can tell you there was a real concern that lack of liquidity would result in grocery stores not having food for extended periods from lacking working capital. That can happen fast.

[Izkata]

You're not accounting for complications from the 10% or so that require medical intervention, who are largely working age.

[jusssi]

Not to mention that when the healthcare system gets overloaded with all the covid-cases, everything else that requires medical intervention also becomes dangerous.

[TheOtherHobbes]

That's a reasonable concern, IMO.

[JoeAltmaier]

My predictions:

The curve will barely flatten, before 'peak infection' is reached. At the current rate, we have only 1 or 2 months to accomplish this, and no progress so far.

Many folks will get sick; the oldest will die at home. For others it will suck, and there will be no help even from neighbors, churches etc (like the last time, they quit functioning entirely)

Some will not notice at all, apparently. They will survive into a world changed by loss, conservatism, suspicion and paranoia.

An initial recession, while paradoxically goods are plentiful due to the reduced demand

The Social Security fund will disappear entirely as a topic of discussion

Civilization won't fall, and public order will only be occasionally disrupted in small localities

I'd recommend establishing a network of close friends who will support one another during this time. It's about the only support we can expect.

[usaar333]

> The curve will barely flatten, before 'peak infection' is reached. At the current rate, we have only 1 or 2 months to accomplish this, and no progress so far.

The curve is flat (at least the new "X" curve) in both Seattle and the Bay Area. That's definitely progress.

[jfk13]

No.

[grey-area]

Stock up on cash, to survive being laid off if you have to.

[base698]

The time to do that was a month ago.

[TeMPOraL]

Yeah, well, I unnecessarily asked my question in the indirect way. What I meant is: what do we expect to see? Wars and famines, or just little hardship? Or something in between?

I've done some preparations over a month ago, but these were preparations for a short-term supply chain disruption. Not for what increasingly seems like a global economic meltdown.

[blihp]

Obviously it's impossible to say for certain. This was/is a relatively controlled economic crash landing. The decision was made to take the plane from 30,000 feet to the runway in record time. So everyone has bumps and bruises, some are going to have broken bones and a few may die as a result of their injuries... but that was the best option available at the time.

Personally, I find this a lot less scary than '08. The main objective of the current exercise is to ensure the healthcare system does not collapse... because if that happens, things could get dicey. (i.e. blind terror would likely cause more damage than the virus itself) Once we get to the point where the medical community feels like 'OK, we've got this under control' things should start looking up since we'll know for sure what the bottom looks like from a health/mortality standpoint. Then people can start sorting out the economic side of the equation. Right now there's fear because no one knows where the bottom is for either situation.

[digitaltrees]

2008 started in 2007, things move slow until they don’t. Banks are just as leveraged as they were then. They started doing many of the same things they did then in recent years. They are stronger in part because of the stress tests and implications fed back stop they are counting on so luckily the won’t likely panic and stop lending to each other. But make no mistake. If mortgages and credit cards start to default their balance sheets have limits on what they can with stand. Tightly coupled systems implode quickly even with small changes.

[standardUser]

You talk as if there are currently shortages of essential supplies. There are not. You could stock up tomorrow if you wanted.

[greedo]

I live in a state barely touched by COVID-19. Since Mar 15, I've never seen a roll of TP in any of the stores in town. Not Costco, Sam's Club, Target or the local grocery chain. I feel bad for people who didn't manage to stock up.

[standardUser]

You speak as if the toilet paper factories have shut down and the delivery trucks are all sitting idle. Everyone decided to rush the stores and buy up all of the toilet paper, and unsurprisingly the stores don't stock enough for every household to buy 200 rolls in the same week.

All you need to do is wait for the next delivery to show up (which it will). The problem is, people like you will continue to buy up everything as quickly as possible, so after the first couple hundred customers the shelves will be empty again. Until the next delivery. That is the problem, not supply shortages.

Don't feel bad for people who didn't horde resources at everyone else's expense. Help those people by buying what you need plus only a little extra.

[0x8BADF00D]

Stock up on cocaine and girlfriend instead

[paganel]

Afaik Norway was one of the first countries that made similar numbers public, as about a week ago they had announced that unemployment had risen from app. 2% to 10.4%. The article is here [1]. My ballpark estimate is GDP going down by 20-30% for the next two quarters at least.

[1] https://www.bloomberg.com/news/articles/2020-03-24/norway-jo...

[onefuncman]

Austria 8.1% Feb 2020 -> 12.2% Mar 2020

Philippines 4.5% -> 5.3%

Belarus 0.3% -> 0.2% (???)

per https://tradingeconomics.com/country-list/unemployment-rate

Israel 18.6% 3/24 to 24.4% today - https://en.globes.co.il/en/article-unemployment-in-israel-up... and https://www.jpost.com/Breaking-News/The-number-of-unemployed...

I'm not sure why Israel has their numbers available so quickly.

[myth_drannon]

Belarus, I suspect agriculture sector is working 110% to provide more food to Russia which started to have food runs.

[apatters]

If the unemployment rate continues to rise at this pace (about 7% every two weeks), it will match the peak during the Great Depression (25%) around the end of April.

That's 40 million people who will have no income and likely no health care in the middle of a pandemic.

Not sure how to process this information honestly.

[trhway]

>That's 40 million people who will have no income and likely no health care in the middle of a pandemic.

if the government were to help regular people that would be say $1T/40M = $25K - one can survive a month or two on that (and those money would have naturally trickled promptly up thus also supporting the top of the economy - corporations, banks, etc. - instead of being directly accumulated there like in the current trickle down approach). My understanding that is what they ultimately did in Great Depression - by way of public works and rudimentary safety net - though the things had to get really bad before they did it, and one can only wonder how much things have to get bad this time.

[blueline]

>$25K - one can survive a month or two on that

US median yearly household income is about $61k

[koheripbal]

You cannot simply extrapolate trends ad infinitum.

You have to look at the vulnerable industries, and assume percentage of those jobs will be lost, up to the limit of that industry.

...but certainly, the longer everyone stays home, the more industries will be sucked into the void.

Ultimately, we will have no choice but to advise people to go back to their lives, despite the risks.

The government does not have the ability to bail out every single industry in the economy.

[apatters]

You can't extrapolate trends ad infinitum, and I didn't.

I extrapolated them for four weeks.

All we need is four more weeks of what has happened for the last two (and most authorities are saying that the lockdowns will last at least this long), and we're at the peak of the Great Depression, unemployment-wise at least.

Moreover, by assuming constant linear growth, I was being optimistic about the slope of the curve. The second week of jobless claims was worse than the first.

[bfrog]

108m Americans work in the service sector.

[lainga]

Well, think about it this way, everyone will be 200% unemployed by the end of the year.

[matwood]

Correct. Todays number isn't even much of a surprise, although it's still shocking to see. I thought the consensus estimate was way too low. Some analysts have been kicking around 20%-30% unemployment before this is all over.

[jiofih]

The US economy looks more like a pyramid scheme than ever.

[malandrew]

The virtuous cycle provided by a functioning market is not a pyramid scheme. Not even close.

Pyramid schemes transfer wealth from the bottom to the top while creating no new additional wealth. America is creating tons of additional wealth and how much each gets from that wealth is proportional to one's leverage and one's leverage is generally proportional to how much one is able to contribute to wealth generation (in either talent or useful capital)

[buzzkillington]

The US has destroyed nearly one trillion dollars in wealth for the bottom 50% since 1989:

https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite...

[malandrew]

You're going to have to elaborate on what you mean by "destroyed".

Also, the US isn't a single entity. It's an agglomeration of 330 million people interacting with one another and it's various levels of governance at the local, state and federal level.

Natural disasters can destroy wealth by destroying assets. Individuals can squander their wealth through bad investments. A government can steal wealth through taxes. Wealth can be forfeited through civil or criminal proceedings. Wealth can dwindle in real terms due to inflation. So on and so forth.

But to say that the "US destroyed wealth" makes no sense and isn't either a supportable or falsifiable statement.

[jiofih]

“Virtuous”. It is fueled by artificial growth. It demands growth and makes sustainable, stable businesses a liability. It is absurd to see companies folding barely two weeks into hardship.

[matwood]

> It is absurd to see companies folding barely two weeks into hardship.

Why? Companies sitting on tons of cash is a bad thing. That cash either needs to be invested through hiring, buying equipment, etc...or paid out to the shareholders (who then spend, invest, etc...). Sitting on cash traps capital that could be doing something else to create value.

And before you say companies need to plan better, companies do plan for downturns. But, no company plans for their revenues to go to near zero overnight.

[Spooky23]

Data released in New York alone is that they are getting 250-300k successful initial claim calls per day, and many people are not successful.

This is going to be the most profund economic event of our lives. Hopefully more like 1893 than 1929.

[onlyrealcuzzo]

https://en.m.wikipedia.org/wiki/Panic_of_1893

^ for anyone who doesn't know, 1893 seemed to be the first of many Argentine financial crises, caused by a wheat crop failure, which caused a negative feedback loop as (mostly) European investors pulled out of South Africa and Australia. The effects spilled over into the US and UK financial systems, led to runs on the banks, and caused a severe recession for 2 years.

[vekker]

That's not too bad... here in Belgium we currently have half of the working population on unemployment benefits.

[schrijver]

Then again for the part of that which is related to corona it’s mostly through the mechanism of temporary unemployment, where the state takes over paying part of the paycheck for the duration of the time that the workers can’t work, and they are expected to return to their jobs once the lockdown is over. Of course not all companies will survive post-corona but it seems like an approach that potentially better preserves the social and economic tissue.

cf https://www.nytimes.com/2020/04/01/business/france-coronavir... (not about Belgium, but the approach is common to multiple EU countries)

[ivankolev]

Canada too, up to 75% of the payroll, for companies with 30%+ decline in revenue. It will take weeks to roll though, it is all promises as of now

[stupandaus]

The US' unemployment rate was much, much lower than many western European unemployment rates prior to coronavirus, so it doesn't make sense to compare the absolute number here - instead you should be comparing relative figures. The US' unemployment rate has tripled in the past 2 weeks based on this analysis.

[doh]

This is just a personal opinion, but I think ~15% unemployment peak is far too optimistic.

I believe that 50-75% of restaurants will never reopen. 20-35% of small to mid-size hotels, venues, spas will declare bankruptcy within this year. Both employ a lot of people.

So I'm afraid the number is going to much higher, maybe even double.

[tachyonbeam]

I know it's really not PC to talk about this (how dare you value money over human lives!?), but at what point does the economic damage this causes become too much? 15% joblessness would be ~50M americans. If just 0.1% of them commit suicide as a result of losing their jobs or businesses, that would be 50,000 dead.

Maybe there's some kind of intermediate between forcing everyone to stay home and not having any mitigation measures in place whatsoever? Maybe a midway strategy would be less destructive. Protecting the economy isn't just about protecting the rich. The rich will be fine, they will get huge government bailouts (zero-interest loans). However, as you point out, a large percentage of small businesses will never reopen. If anything, this crisis is hugely benefitting Amazon & co.

[kazen44]

the problem with your statement that NOT doing any of the counter measures (like self isolation) would result in the overloading of the healthcare system and many people dying. (heck, the healthcare system in the US seems to be overloaded already).

When you have no further option for healthcare because the system is broken and overloaded, why would going into work make any sense if it resulted in either an period of illness with structural symptons or even death.

In times of crisis, people want food on the table and a roof over their head, if the cost benefit of doing legal work and following the rule of law turns negative, people might aswell just steal food and stop paying rent, who is there to stop them?

[koheripbal]

Because the vast majority of people under the retirement age resolve the illness in a week or two without the need for healthcare assistance.

The people who need to be locked-down are those over 60 - not the entire population.

[tachyonbeam]

There are also measures that can be taken that are not a complete lockdown, eg: limiting public events, temperature monitoring in workplaces, etc.

[usaar333]

We're not going to hold stay at home forever - even Wuhan is exiting lockdown (after 2.5 months).

[doh]

Unfortunately not really https://www.bloomberg.com/news/articles/2020-04-02/chinese-c...

[tachyonbeam]

I mean, I hope not, it certainly doesn't seem realistic to do so, but I see people pushing for multi-month lockdowns until mid-summer.

[doh]

I think the difference here is that virus bring death to us. Suicides can be reduced if governments create the correct stimulus.

Again, it's super easy to criticize when not in charge, but my reaction would have been to shut down any means of travels to and from the country, shut down the country for 45 days completely, slowly restart the economy from crucial business to less and introduce couple of strong measurements to compensate workers for lost income.

[ghettoimp]

Hard to say.

At start of year, situation normal, the economy we had was unsustainable. We were collectively waging war on our environment and winning. Folks mostly had jobs, which was good, but income inequality was nuts and lots of jobs didn't pay a living wage. Housing costs, healthcare and college were out of control.

In short, the world could really use a correction. The pollution reduction from this shutdown has been dramatic and wonderful.

This will hit the economy very hard. The rich will be livid and will push hard to return to business as usual. The rest of us will suffer terribly. Maybe so terribly, and in such numbers, that we have to address it. Maybe we'll come out the other end with something more sustainable for everyone.

(Probably not.)

[doh]

> Maybe so terribly, and in such numbers, that we have to address it

That’s unfortunately my reading. There are stores boarding their storefronts in LA [0]. Very very premature but gives you a glimpse into the believes of some.

I’m sure at the end we will come out of it in better place that we entered it, but I’m dreading the path we have to take to get there.

[0] https://mobile.twitter.com/tmz/status/1244412908273991680 (I know, I know, it’s TMZ)

[PeterisP]

After this is over (whenever that is) we expect people to resume eating out and traveling. I agree that it's likely that 50% of restaurants and 25% of hotels/spas would become bankrupt and shut down, but that does not mean a 50% / 25% reduction of employment; I would expect most of the bankrupt restaurants and hotels/spas to be immediately replaced with new ones, employing much of the same people and renting much of the same premises (only cheaper), and ran/owned by the same people. In such an environment, the main impact of a restaurant going bankrupt is that the creditors and investors of that restaurant lose their capital, but it can reopen after a reorganization when there's demand once again.

[doh]

You are of course correct. There will be a bottom and then a recovery.

The speed of recovery will depend on how much liquidity will be available in the market. And I believe it’s going to be quite low.

You see, all of these business depend on discretionary income and after the shock to the people they will sit on any penny or they will not have it themselves.

I believe we will eventually get out of this but my timeline is 3-5 years. If people are unemployed for more than few months their prospects drop rapidly. People with no options produce ruthless competition that pushes salaries down producing wider inequality and limits the discretionary funds needed to spend in those establishments in the first place producing quite a vicious circle.

[PeterisP]

I agree that wider inequality is a likely outcome.

There will be people who won't be able to spend anything because the depression drained them absolutely, and there will be people who are accumulating income that they can't spend due to the lockdown, and will have the funds to resume all the postponed vacations with vigor as soon as they can - in the aftermath, tourism will be cheap for those who have discretionary funds for tourism, because many won't, and the service industry will be agressively competing for any income they can get while having a cheap workforce.

[shostack]

So much of this depends on how the administration handles this. I don't have great confidence based on how they've handled things so far.

[doh]

Very true. I spoke to a few economists and they believe there are going to be two or three waves of CARE ACT-like packages.

It's easy to criticize the government without having to bear the responsibility but I wish they did this much earlier, with more force to bring confidence to the people rather than markets.

I spoke with a branch manager at a bank day before they announced the extended timeline for shut down up until end of April. She was cheerful because she believed that this will be over in two weeks. I tried to gently tell her that I believe we are looking at months (two at minimum), not weeks of lockdown and even that might be very optimistic. She didn't take it well.

People are confused and scared. I do wish the govs (local and federal) would be the leaders everyone needs them to be, but unfortunately, that's not yet happening (there are some exceptions, but very few unfortunately).

[redisman]

Probably most small(and medium, and big) businesses can hold on for a month or two at this rate but failure rate is going to approach 100% as time goes on.

[unethical_ban]

Half of all restaurants in the US will not reopen? Multi-year depression?

[doh]

That's my expectation, correct. I'm definitely not the only one [0]

[0] https://www.atlantamagazine.com/dining-news/chef-hugh-acheso...

[amiga_500]

What happens to all this commercial rental space? Rents are going to drop through the floor, and any business who signs up will have dramatically lower operating costs than in January.

[doh]

Landlords are scraping by already. We have multiple offices across the World and our landlord begged us with tears to pay the April rents.

Commercial real estate will be impacted as heavily as any other business.

[usaar333]

Oddly enough, here in the Bay Area (SIP 2.5 weeks in), most restaurants seem open. Take-out is a thing after all.

Travel/conference focused items (hotels, venues, cruises) are much more affected.

[brewdad]

A bunch of Portland restaurants found that they were losing money faster by offering takeout versus simply closing their doors completely. Obviously, a number of factors play into whether this is true for any given restaurant but takeout business isn't necessarily a panacea.

[marricks]

That is interesting but probably not indicative of elsewhere.

Portland OR is a bit techy and boogie but even then it has still been hit HARD. The places I frequent all have had drastically reduced hours and business. I haven’t heard of any closed for good but more and more and just on a long hiatus or boarded over...

[doh]

I live in LA. It's not that different. I did talk to some owners of the restaurants and they said that their revenue is down by around 80% even with takeouts. Most people are not spending money. So it's something, but hardly enough.

[enraged_camel]

Goldman Sach may estimate the unemployment rate peaking at 15%, but the Fed said it could reach 32% by summer.

[cm2187]

And also there are still a few states that aren't in lockdown yet.

And meanwhile markets are up!

[treyfitty]

The forecasted unemployment rate is weird: economists are not forecasting a major increase for April 03s release. Do you happen to know why?

https://tradingeconomics.com/united-states/unemployment-rate

[itamarst]

April unemployment is probably only measured mid-March, so it predates all these claims.

[hurricanetc]

They do the monthly survey in the middle of the month. Most of the state shutdowns happened after the surveys were completed.

Don’t ask me why they don’t just use the weekly numbers.

[makomk]

The weekly numbers are unemployment benefit claims, whereas I think the monthly employment statistics are based on surveying the population and counting the actual number of people who are employed, seeking work, etc.

[hurricanetc]

Yeah I understand the distinction but the weekly numbers capture much of the same information and are more accurate. The monthly survey is just something we do because we’ve done it for a long time.

[TheCoelacanth]

The weekly numbers are number of newly unemployed.

The unemployment survey is measuring how many people are currently unemployed.

The former is correlated with the rate of change in the latter, but is not the same thing.

[SilasX]

To save everyone the search, here's the link to parent's analysis from last week:

https://news.ycombinator.com/item?id=22693012

[blackRust]

You may be interested in these predictions:

* https://www.metaculus.com/questions/3922/what-will-be-the-us...

* https://www.metaculus.com/questions/3933/what-will-be-the-us...

[op03]

Is there a state wise breakdown?

I would guess NYC is contributing a big chunk, and if things turn around there in a month or two should be okay.

[japhyr]

Do you have any reason to think we're not going to see the situation in NYC play out in numerous other US cities over the coming weeks and months?

[op03]

Not really. I have been thinking its going to play out like China, Italy, Spain etc where certain regions take disproportionate hits.

Texas and California don't seem to have been hit as hard as NY-NJ. So was just wondering if the unemployment filings have jumped equally in all 3.

[stevenwoo]

Everything that is non essential in California is closed and only companies that can function with only working from home are still operating AFAIK. It doesn't matter how bad the outbreak is here, we've been on a shutdown for longer than anywhere in the USA, at least here in Northern California. Many restaurants have closed, only some are open for take out, but that probably depends on area. This last week they finally told many construction/lawn maintenance workers to stay home as well, depending upon circumstances.

[redisman]

Florida could worse, they just shut things down yesterday(!) and they have more cases than WA today which has been effectively shut down for a month or so.

[deepakhj]

Most businesses/restaurants are closed here. I would imagine the #'s are the same.