The first time unemployment claims were announced this morning.
We saw a total of 6.6 million people file last week. This is on top of the 3.3 million that was announced in last weeks numbers. This puts the total in two weeks of near 10 million.
This is an astronomical number considering that roughly 150 million people employed in the United States at any given time. Keep in mind, this number is not likely to drop any time soon as companies are just starting to lay people off.
When we see what is happening, no numbers are off the table. Could unemployment hit 20%? 30%? Anything is possible.
Yesterday, the Governor of Florida put the state on lockdown. This means that, for all practical purposes, economic activity is at a standstill. Only those that are considered essential are going to keep operating.
The economic impact is going to be mind-boggling. Part of the stimulus that was passed a couple weeks ago was loans that could be used if companies kept employees on the payroll. If the lockdowns become widespread, we will see the incentive removed since businesses will have zero revenues.
We are in uncharted waters now. Nothing like this was ever navigated before. Even during the Great Depression, the drop was spread out over a longer period of time and did not hit most industries at one time.
This time, it is widespread to all industries and few are being spared. We also see debt loads that make it impossible for both individuals and companies to service the debt load. At some point, this leads to defaults, putting further downward pressure on everything.
In response, the United States Fed open up the spigot and wiling to ease to whatever degree is necessary. Oh the arrogance. If they were able to stimulate demand, they would have. We now see more misguided policies putting more money in the hands of the banks that they are not going to lend out.
We already saw one round of fiscal stimulus from the government; more is going to be needed. This thing is moving so rapidly that the total price take could read tens of trillions.
If the unemployment number gets into 40M-50M, everything will drop like a brick.
In the end, most of what the Fed is doing will have little impact.
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