Theory of Relativity

Every Thursday we get data on the number of new unemployment claims. That number has never carried more weight than now. Today’s number is 1.3 million. That’s another 1.3 million people who have been laid off or have lost income. It’s added to continuing claims to show that an awful lot of people are now unemployed, about 30 million. But this is a weekly number. And it’s all relative.

While the normal weekly number is in the 200,000 range, this is not a normal time. With a shutdown, we expected big numbers, and employers did not disappoint. This week’s number IS lower, but it’s only 10,000 people lower. We expected the number to be 1.25 million.

And this reported number doesn’t count people who are filing under the federal program which allows self-employed and contractors to apply. That group represents about another million people, making the total 2.43 million in NEW claims.

Relatively speaking, the weekly claims are declining and possibly bottoming out. But it’s a weekly number and can be quite “noisy.” That means we depend on the trend line. The 4 week moving average is now 1.375 million. That’s a drop of 60,000 people per week. Good news?

It’s all relative. Yes, we appear to be slowing down on job losses, maybe hitting the bottom. But the greatest number of new claims came from 3 states: California, Florida, and Georgia. All those relatives spreading the virus have resulted in spikes in cases and new limits on business activity and group gatherings. So here we go again.

What will next week bring? While markets said “meh,” to this week’s data, any increase in this number will result in a pause. An upward trend in unemployment could really cause investors to pull in.