As the stock market steams ahead today, the disconnect between our social and economic problems looms larger. Clearly, the economic recovery has been set back by the civil unrest that has destroyed so many business districts around the country. (No social commentary here — just the economic facts.) And the sad fact is that many of the small storefront businesses impacted were just about to re-open their doors after the shutdown. How many will now just give up is open to conjecture, but this can’t be good for the employment numbers.
The Jobs numbers will be the focus for the rest of the week. Tomorrow (Thursday) morning we get new weekly claims for unemployment. In the past 10 weeks more than 40 million claims have been filed!
The weekly claims number will be followed by Friday’s headline monthly unemployment number. In percentage terms, it is likely to reach nearly 20 percent, according to the most pessimistic forecasts.
The number is not just a number. It is PEOPLE! It is people who cannot pay rent or mortgage, or in some cases pay for food or medicines. If you don’t know someone who is unemployed (after all, the figures are 1 in 5), then you are indeed living a very privileged life!
Unpaid Jobless Benefits
Even worse, a new Bloomberg report says ONE-THIRD of the unemployed who deserve benefits have NOT BEEN PAID!
Here’s a direct quote from the article:
The Treasury disbursed $146 billion in unemployment benefits in the three months through May, according to data published Monday — more than in the whole of 2009, when jobless rates peaked after the financial crisis.
But even that historic figure falls short of a total bill that should have reached about $214 billion for the period, according to Bloomberg calculations based on weekly unemployment filings and the average size of those claims.
One-third of pandemic-era jobless claims have gone unpaid.
Illinois and Florida lead the way in unpaid claims, with systems that have broken down. Call centers are so understaffed that even robo-dialing hundreds of times an hour can’t get through to a claims staffer. Certification systems can’t be accessed. And debit cards are distributed with no money added. This is a national disgrace — and a personal heartbreak.
Some economists have called the additional Federal unemployment benefits of $600 a week “too generous” and a disincentive to get back to work. A recent University of Chicago study notes that 68% of workers who are eligible for unemployment checks are getting benefits that exceed their lost earnings.
But that doesn’t take into account the millions who are “eligible” according to the law — but still not receiving a penny! Yes, statistics can be deceiving.
And Still The Stock Market Rises
The only explanation is that money moves markets. And the Fed is in the process of creating more than $6 trillion in new money. It’s not getting into the hands of people who will spend it. Stimulus checks are still delayed, and especially so for the poorest who are waiting for payments for their registered dependent children. Businesses are still not allowed to fully re-open.
So where is all that liquidity going? Into the stock market. The smart money knows that stocks have over the long run always beaten inflation. And what is inflation but too much money chasing too few goods.
So, as analysts tout the “recovery stocks” (those rebounding from total disaster — think cruise lines and energy) or the stay-at-home stocks (Amazon, Netflix,etc) or the traditional value stocks (Campbell’s Soup, etc) or the rebound stocks (banks, autos, restaurants) — let’s keep this in perspective.
It’s unlikely that the economy will rebound to previous levels of growth, employment, and consumer confidence for many months, or years, into the future. Watching the stock market head back to its peak is almost embarrassing. And that’s The Savage Truth.