13.3% unemployment rate

That one surprised me, as indeed it did most other economists.  What should I learn from this episode?  After all, labor market adjustment was relatively slow coming out of the 2008 crisis.

My tentative hypothesis is that “matching” is more important than I had thought (and I already thought it was quite important, relative to other macro commentators).  One feature of the current layoffs and rehirings is that the ties between workers and firms apparently were not so severed in the first place.  For most sectors (cruise ships aside, etc.), no “rematches” were required, and so rehirings were accomplished very quickly.  As demand (partially) returned, employers wanted at least some of the old workers back, and workers wanted their old employers back, and then it happened.  “Figuring out where I belong” did not slow down the process very much.

That is good news for the remainder of the recovery, provided the recovery happens soon, and it is at least one factor (not necessarily decisive, of course) militating in favor of a speedier reopening.  “Reopen before the worker-employer ties are lost!”

It also implies that during regular, non-pandemic downturns a lot of the slowness of labor market recovery has to do with matching rather than demand per se, noting that the two interact.  And that is a sign of a more general pessimism for the future, since demand problems are easier to fix through policy than matching problems are.

Another possible implication of the new numbers is that employers realized that “F*** it, I want to get back out there” is the prevalent consumer and also worker attitude, whereas Twitter-bound intellectuals were slower to see the same.


So a two week lockdown is optimal, but a four week lockdown will lead to ties being lost? That's contradicted by Greece, which had a four week lockdown, and anecdotally I've not seen the economy dip into deep recession yet (could be wrong).

I think the real reason is the US economy is just very dynamic, like a coiled spring.

It's been longer than that. New York State went on lockdown on Mar 20 and is reopening only now . That's 7 weeks

Sorry 11+ weeks not 7 weeks

Sorry my OP was also wrong on the dates of lockdown, GRE had a lockdown from mid-March to mid-May, that's about two months, with hotels to open the end of this month.

But the OP point remains, in that employment ties are not binding in the USA. My experiences with American employers are they are quick to fire and hire, assuming they can find a replacement in the marketplace when the time comes. So 'employee retaining' is overrated, notwithstanding the outlier feel good stories you hear in media about family businesses with employees who have been working there for two generations, etc etc.

I very much disagree, Ray.

So much of this lined up for many employers to hire back the same employees: lack of other job opportunities (especially in the same field), expectations that businesses would reopen within a few months, and the extra $600 per week of unemployment insurance.

For example - if you were a bartender, where the hell else were you going to go work as a bartender or waiter/waitress while your employer was closed?

Also - hiring and training employees is something of a hassle for an employer. Plenty to do for employers to figure out how to open up again without adding one more thing to the list. Exception would of course be if they actually need to staff up (e.g., Wal-Mart, Amazon, grocery stores).

What was the unemployment rate in Greece before the lockdowns, Ray?

Or at least read an article explaining how the BLS statistics have become impacted by the pandemic. 'When the U.S. government’s official jobs report for May came out on Friday, it included a note at the bottom saying there had been a major “error” indicating that the unemployment rate likely should be higher than the widely reported 13.3 percent rate.

The special note said that if this “misclassification error” had not occurred, the “overall unemployment rate would have been about 3 percentage points higher than reported,” meaning the unemployment rate would be about 16.3 percent for May. But that would still be an improvement from an unemployment rate of about 19.7 percent for April, applying the same standards.

The Bureau of Labor Statistics, the agency that puts out the monthly jobs reports, said it was working to fix the problem.

“BLS and the Census Bureau are investigating why this misclassification error continues to occur and are taking additional steps to address the issue,” said a note at the bottom of the Bureau of Labor Statistics report.'

And in before the crazed partisans of all stripes - 'Economists say the BLS was trying to be as transparent as possible about how hard it is to collect real-time data during a pandemic. The BLS admitted that some people who should have been classified as “temporarily unemployed” during the shutdown were instead misclassified as employed but “absent” from work for “other reasons.”

The “other reason” category is normally used for people on vacation, serving jury duty or taking leave to care for a child or relative. These are typically situations where the worker decides to take leave. But in this unusual pandemic circumstance, the “other reason” category was applied to some people staying at home and waiting to be called back.

This problem started in March when there was a big jump in people claiming they were temporarily “absent” from work for “other reasons.” The BLS noticed this and flagged it right away. In March, the BLS said the unemployment rate likely should have been 5.4 percent, instead of the official 4.4 percent rate. In April, the BLS said the real unemployment rate was likely about 19.7 percent, not 14.7 percent.

Economists said the big takeaway is that it’s hard to collect real-time data during a pandemic and that while the unemployment rate remains high — likely more than 16 percent — it has declined a little from April.' www.washingtonpost.com/business/2020/06/05/may-2020-jobs-report-misclassification-error/

A fair amount of useful information to be learned - the trend shows improvement, the numbers should be less distorted as the pandemic recedes, and BLS has precisely one political appointee.

An improvement over the expected 20% , but still 16.3% rather than 13.3%. And the monthly correction for April made Apr worse than reported , lets wait for May's correction

+1. I hate giving prior a point but hear you go you filthy bastard! TC went off to the races with just the headline number.

Any way you do the accounting, it is still improvement vs. April numbers, whereas consensus forecasted further contraction.

The same "error" existed the previous month, so the drop in unemployment rate is apparently real. Certainly the stock market thinks it is real, and that represents people who think about these numbers all day making bets with real money, as opposed to dweebs making anonymous blog comments. But anyone here who believes that they are smarter than Tyler, and have seen something that all other analysts have missed, should be selling short this morning. Let us know how it goes.

LOL at the commentariat, most of whom with no skin in the game

Ok then. Anecdotally, what is happening? Are people getting hired back, places that closed opening?

The people I deal with there is an improvement. It is dependent on the specific location. The wholesalers that are in areas with few cases are back at full employment. The ones in the city are not there yet. Local businesses are either hiring because they are busy, or the owners are working. Construction projects have been 100% since about two weeks in. Manufacturers are full employment, and projects that were delayed are in full swing.

Restaurants are 7% of employment, tourism is 9%. Neither are anywhere near normal.

$1,200 stimulus plus $600 per week unemployment + regular unemployment has a dulling impact on the desire to find work.

Arguing about these numbers is dumb. By November, June unemployment numbers will be irrelevant.

Re: $1,200 stimulus plus $600 per week unemployment + regular unemployment has a dulling impact on the desire to find work.

What does that hypothesis have to do with the numbers?

I don't think it's a hypothesis. The payments are fact. Collecting unemployment rather than working amounts to a PAY INCREASE for people making less than $4K per month. Unless unemployment is extended, lots of folks will be looking to get back to work in early July.

But the payments also stop if you don't go back to work when offered your job back. And it's only true for a minority of unemployed that that extra 600$ gives them more pay than they made when working.
By the way we are talking about an unexpected drop in the headline number-- not an increase or a stubborn refusal of the number to change. Where's the evidence for the sort of malingering you posit? seems to me this is evidence for the stimulus bills having worked, at least partially.

Re: Arguing about these numbers is dumb. By November, June unemployment numbers will be irrelevant.

Maybe, maybe not. People's perceptions about the economy usually lag a bit, generally to a few months previous. George HW Bush was perceived a presiding over a recession in November of 1992 even though the economy had improved a lot since earlier in the year.

We'll see.

What aria are you whistling past that graveyard? And the economic contretemps are only one item in a whole list of things hobbling Donald Trump right now. At this point he's basically Jimmy Carter-- without the sincere nice guy Christianity.

We are trying to see what is happening in the economy now, as far as recovery.

Besides the cost of matching, I would guess that training also makes a difference. It always takes a while until an employee gets up to speed on a new job. Further, already having a personal relationship with the employer certainly helps too. Not sure if that is already fully covered by "matching". Matching implies that employees are like pieces of a puzzle and all you need to do is finding their place. In reality, these "pieces" are malleable and can adapt to their job over time by learning and gaining experience. This is certainly also relevant beyond matching.

For most sectors (cruise ships aside, etc.), no “rematches” were required, and so rehirings were accomplished very quickly.
Temporary furlough vs being laid off is matching issue.

But this implies that the previous drop en employment was mis categorized to some extent. Maybe this all off as a statistical fluke of the pandemic, the uncertainty of how exactly to handle employee issues.

But a quick recovery to what? We were already under stress and a mild recession cycle was already under way. The real battles over saving public sector was the issue before the pandemic. And we still have trillions in losses from bad military hardware, mostly the result of that criminal John McCain. Obamacre was never paid for after the Obamacare tax revolt. Wealth inequality was still resulting from government bailouts. The rebellion of the poor was still due. The regularly scheduled default was coming up, though I thought we might lasted another eight years. Powell was still the same liar idiot that Bernanke was. Krugman and the flat earthers were just as stupid as before. Illinois is still bankrupt. A Vermont maple syrup farmer was still preaching a brand new 'This time is different'. We still have to deal with retarded states like Arkansas which gave us Tom Cotton. Rick Scott was still organizing mass shootings in Florida schools. Now we have a mayor of LA hiding and whimpering in fear. DaBlowsio of NYC still a screwball. And Governor Abbot still planning mass Walmart shootings.
We go little to show, no improvement, the same instability.

Vermont, Alaska, Wyoming, Askansas still on the brink of economic extinction, and Berkeley economics professors still as useless as they have been for twenty years.

Repub idiots were still doing the Saudi oil deal and getting blow back in shootings.

We will default, that is the issue. We always default, it is in the Swamp and it is in the Constitution.

We saw some advances in web software, but hardly enough to call us a normal, developed nation.

I summary, we need to be slightly more efficient about being idiots, be stupid a little more often with less total destruction.

Your suggestions for reform are not apparent.

In Germany, employers had the option of keeping there underempolyed workers on the payroll - but the salaries for the most part getting paid by unemployment insurance. (the system is called "Kurzarbeit").
There is also the option of keeping the worker partially empolyed, for example for 10h/week instead of the regular 40h.
For the unempoyed hours, the worker gets partially paid by unemployment insurance.

The effect so far has been a very mild increase in official unemployment (6,1% in May, up from 5,3% in February) . But a huge surge in "Kurzarbeit".
The total effect is probably similar to the US. But of course, "Kurzarbeit" solves the rematching problem and might therefore be the more efficient policy.

The matching problem wasn't an issue this time around. Could you afford to do Kurzarbeit for a year or more during a financial crisis?

The issue with that policy that could turn out to be serious would be companies keeping a large number of employees on tap at the governments expense. As an employer I'd much rate have 4x number of employees on 10 hour weeks than fire 3x employees. If my business comes back they are ready to go and if doesn't then it didn't cost me much extra. On the other hand, other companies who might have been able to hire those employees have to fight an uphill battle with them still having a part time job.

This is a head fake-- there was reported delay in getting PPP loans out in mass.

This is nothing more than the PPP numbers coming in late, It will disappear next month and be 2x as bad. Also, the PPP "re-hires" were predicated on free money, so the ties are not real as the fundamentals are not there.

Anyone on the street looking at real business would tell you the same, the demand is gone, the employees are really lost but people are taking in one last breath based on massive stimulus.

To read these numbers as anything more significant is ridiculous. As people start getting the virus again-- as is already starting-- the second wave is gonna hit big, as the base numbers are worse now and we're looking at a major market correction in the fall... how is this not obvious.

Is the split from main street and wall street so big that you guys are in fantasy land?

Do not mistake the map for the territory.

As a note all my contracts remain cancelled I am only getting through this period due to PPP loans-- the demand is not back in advertising production. Friends and colleagues say the same...

I got two low ball offers that I had to turn down cause I would have to pay employees less, and would risk no loan forgiveness.

The market is taking crazy pills... mean while AMD is over 125 PE ratio... zoom video numbers 1200 (but historically that's pretty low.. which is bonkers.)

Have you had corona or know people with it-- it took me out for a week -- unlike anything else I ever had. Definitely not the flu. The effects seem to linger in odd ways.

I work at a manufacturer/retailer. 5000 un-furloughed at the start of June, retail sales up 30% over LY. Maybe people want to splurge so badly that companies don't need admen paving the world in Viagra adverts any longer.

30%+ over last year-- seems like your business benefitted from this. What was the January figures vs LY?

What do you manufacture / sell?
Hand sanitizer?

Seems to defy the trend.

So you believe all or most of the 2.5MM jobs added are PPP? Any stats or evidence to support? I'm genuinely curious; I've tried a few different back of the envelope calculations to try and determine what proportion of job gains might be PPP and get a huge range.

Not sure where you get increasing cases, cases have steadily declined in US since April (there is a dip at the beginning of every weekend and a spike after as people get tested). If there is a second wave, I personally don't believe economic consequences will be as large as the March/April recession as people are clearly over lockdown and I don't think there would be any support for further government mandates. I can imagine a large dip in demand for personal services again if there is a second wave but nowhere near as big as first as people now know the virus is not nearly as deadly as first thought.

Q3 and Q4 will be very interesting as loan forbearance starts to end but there are several months to recover and strengthen financial positions before then.

In every economic cycle, you can find plenty of anecdotes why the numbers must be wrong. How can we be in a recovery, my brother still can't find work! How can we be in a recession, my company is doing fine!

We're bouncing back, clearly.

"cases have steadily declined in US since April "
Curious as to what number you are talking about, I'm going off of Johns Hopkins data. The rate of new cases is falling (in some areas) but total cases is still rising. Ie if given the same R-nought with a higher base number means more spreading, and this is not even including the increase in the R0 if we, "go back". Even if it is hard to track active cases, it is clear that total number of active cases is higher now than in April.

Historic trends point to a much larger second wave. As you said people will resist a lock down.

Agreed on Q3 and Q4.

As far as the PPP numbers are concerned, it seems like a big logical gap to think that a forgivable loan program that pays pay role costs would not increase the employment numbers. That seemingly defies logic.

I'd be curious as to your range. No, I do not have any figures to back up my claims. My claims are based on the fact there was +500B$ injected into the economy through payrolls. The program is designed to do exactly that, ie: "Payroll Protection Program"

Here is just a sample of the discussion around the program:
"I laid off my employees in March. Can I rehire them with PPP funds?"

"Yes! If you had previously laid off your employees, you can go ahead and rehire them using PPP funds. That is actually the intended purpose of the PPP."

"If you reinstate your FTE count by June 30, you qualify for full forgiveness on your payroll costs. Otherwise, you will need to pay back a portion of costs."

So there is a massive incentive to get people let-go in March/April back on the payroll in order to avoid paying back the loan regardless of real demand.

RE: Evah
"We're bouncing back, clearly."

Like a dead cat. We are from the correction. I'm shorting. You do you though.

The fact is, the virus is still here, if it was dangerous in April it is more dangerous now as we have a higher base rate of infection, with a still critical mass of people that have yet to get the virus. So there is still a large population at risk of getting or transmitting the virus.

You can call my example anecdotal but the ad business does reflect businesses temperature in how they are investing.

"5000 un-furloughed at the start of June, retail sales up 30% over LY. Maybe people want to splurge so badly that companies don't need admen paving the world in Viagra adverts any longer."

Again this is all based on stimulus money that was a massive injection to the system-- that cannot last forever, yet the fix was short term, while pandemics roll out slowly. But I am curious to what you make.

We are not even at halftime yet, and people are celebrating victory... It is absurd.

Hmmm, in case my previous post didn't go through.

The Active case count peaked on May 30th.

Source: worldmeters.info

That is not a safe link-- Ill stick to real numbers, thanks Bot.

Being that you are dense and cannot tell the difference between daily new cases and totals:
New cases : same as early April numbers...

Total cases:

Active cases is predicated on R0 which is predicated on behavior and will spike the moment we stop social distancing. We also do not have the needed amount of testing to judge when or some one is no longer infectious-- so active cases is a BS stat.

But again you are confusing acceleration with velocity.
As other users have pointed out daily new cases is still climbing up.

Look at California just got a new record of daily increase in cases:


Worldmeters.info is not a safe link?

Ok, well that's one way to avoid seeing information that doesn't fit your world view.


For those who aren't afraid to click the link, you'll notice that Active cases in the US peaked on May 30th.

But shorts like him help the market rise so whatever. He was probably short all through 2009-2012 too.

"Even if it is hard to track active cases, it is clear that total number of active cases is higher now than in April."

No, that's really not clear. Much more testing now with lower positivity rates than in early April basically everywhere. New York area had crazy positive testing rates in April - over 50% at times in NYC itself.

In total across the U.S., the testing positivity rate has dropped from about 20% in early April to <5% today. The U.S. is reporting a similar number of cases to early-mid April with testing indicating that a higher percentage of infections are being identified. https://coronavirus.jhu.edu/testing/individual-states

We'll see about a second wave. Much of the country hasn't been fully hit with the first, but people have also figured out how to engage in a fair amount of economic activity while lowering - but not eliminating - risk.

The findings on possible T-Cell cross-immunity from other coronaviruses - perhaps in 40% to 60% of the population - plus the generally good experiences with re-opening in Europe both suggest a more favorable outcome than we once feared.

JS - you are fearmongering and not credible. Citing things like "highest daily case count" without any regard to amount of testing, where testing was done, positivity rate, or by how much that case count exceeded prior numbers.

It's still a really bad report, and the actual number is 16% not 13%. So let's not get carried away.

The best explanation for it not being worse yet is that the SBA PPP loan forgiveness program worked very well despite all of the short-term roll-out problems. If so, then PPP should have been much, much better funded than it was. Recall that re-hires qualified for loan forgiveness as long as they were done quickly, but new hires did not, so there's your "matching".

This view is supported by the fact that the PPP program was over-subscribed right away and there is still a ton of latent demand for it. It is also supported by comparative evidence, from which we know that other countries that enacted payroll support programs also kept a lot of people off of the unemployment rolls.

If that is correct then we won't know the true state of the labor market until those benefits expire (end of this month) and employers are truly forced to make a choice.

If matching is so costly, perhaps the effected composition of employers in 2020 were less likely to use this crisis as an opportunity to regrow their businesses with a more talented workforce. In other words, not raising expectations on the quality of potential new employees during a recession might help grease the gears of recovery. After all, the recession doesn't somehow magically boost the quality of the workforce in aggregate, so employers expecting a flood of qualified candidates makes things worse for everyone.

Scott Sumner claims that this is just a particular application of a more general principle: "Real shocks simply are not as important as everyone has assumed."

I thought Scott Sumner is old enough to remember the energy shocks of the 70s. Which certainly seemed important at the time, without anyone needing to make any assumptions at all.

Good, the little sh*ts need to get back to work and make my retirement go a little smoother.

The sound of your retirement going even more smoothly than you anticipated,

I agree with several commenters that PPP loan forgiveness is a factor. I would point out, however, that the original 8 weeks to spend at least 75% of the loan proceeds on payroll in order to qualify for loan forgiveness was revised a week ago to 24 weeks and 60%, thus stretching out the period to spend the loan proceeds on payroll and lowering the percentage spent on payroll in order to qualify. This should reduce the cliff effect on employment (i.e., lots of firings at the end of 8 weeks). Of course, it could also mean fewer rehires as businesses re-open. Since this change in the law has only been in effect a little over a week, it shouldn't affect that many employers who got PPP loans early. Congress was also considering a separate revision to the PPP loan program that would drop the requirement that the borrower file an application for loan forgiveness in the case of small loans ($500,000 or $350,000, the two options Congress was considering last week). I don't know if this was passed last week. Anyway, it's good to see that Congress realized the flaw in the original PPP loan provision.

Is anybody keeping score on the accuracy of “expert” predictions? It’s been a real bloodbath, but I doubt the rampant failures will humble them.

In a related vein, the experience of the ill-advised shut down of the economy should provide a fertile field for economic research, if there are any real economists left. The stimulus was actually directed to the people, rather than laundered through the politically connected, for example.

Looting and rioting like our Founding Fathers did, makes for a more vigorous people and a more vigorous nation.

As critics of the lockdown insist that all it did was cause an economic calamity, a study released today finds that the lockdown prevented about 60 million infections in the U.S. (while studies in other places find even more dramatic results from their lockdowns): https://www.washingtonpost.com/health/2020/06/08/shutdowns-prevented-60-million-coronavirus-infections-us-study-finds/ 60 million more infections in the absence of the lockdown: now that would have been an economic calamity.

The lockdown was a great success, and Americans are mad as Hell about it.

Do you have a link to the study? By writing: "while studies in other places find even more dramatic results from their lockdowns" I assume you don't mean Norway which found its lockdown was no more effective than social distancing like Sweden or Japan, which never had a lockdown, but has had only 900 deaths. On a per capita basis, the U.S. with its great lockdown success still has had 50 times as many Covid-19 deaths as Japan.

According to a headline from ABC News:

Coronavirus may have been in China in early fall, satellite data suggests

Can’t trust them.

This didn’t need to happen.

What we did learn is don’t put sick people in with old people and maybe some hospitals can still perform outpatient surgeries and needed treatments.

Or the US just might bring back home doctor visits.

Is the tech there and portable enuf for simple procedures?

Could EMT vans be adapted? If you have a driveway....

I don’t think I’d want to have a tooth extraction in my driveway, tho.

60m? There have only been 7m in the entire world. Those kind of extreme predictions are completely divorced from reality, as everyone should have learned by now. But of course the lockdown apologists will never give up the unfalsifiable claim that that's because the locked down worked - even though we actually can look at how varying levels of lockdown affected different countries

The U.S. has 118,000 deaths from covid-19. There are a number of antibody studies out now and, interesting, the more "optimistic" you are about the virus and how relatively harmless it is, the less you should be protesting high estimates of people who have already been infected.

If we assume an infection fatality rate of 0.6% and we take into account the fact that deaths lag infections by about two weeks, the U.S. would have had almost 20 million cases two weeks ago.

If you use one of the more pessimistic studies out there -- an antibody study done in Spain that estimated IFR to be 1.15% -- then that still means 10 million people were infected two weeks ago.

Given these numbers, 60 million is not "extreme" at all and is not difficult to imagine if people just carried on as normal with no lockdowns and minimal or no voluntary social distancing. Everyone knows that the 7 million global estimate and 2 million U.S. estimate are grossly undercounting actual infections.

"If we assume an infection fatality rate of 0.6% ..."

On May 20th, the CDC stated the most likely IFR is 0.25%.

...based on no publicly available data or published research. But if they are right, to the original point, there would have been 47 million infections in the U.S. two weeks ago.

+1, it's quite likely that far more people had Covid19 than expected and that deaths lagged the infection by more than 2 weeks.

...for most, this is likely the case. Think of all these athletes testing positive...did ANY of them actually feel sick? I'm seriously asking I don't know. My impression is very few did, and none severely.

The other thing that's looking increasingly likely is that well less than 100% of the population is susceptible to infection (or that, if some people aren't outright non-susceptible, they're very difficult to infect).

There's been the finding of possible t-cell cross immunity (from the coronaviruses that cause colds) in about 50% of the population.

That makes sense in light of the rather curious point that we have numerous documented superspreader events but also several studies finding a household attack rate of <20% for confirmed cases. So, it spreads like wildfire when people are in close contact for extended periods, but somehow over 80% of people living in the same household aren't infected?

Maybe it's 0.25% IFR across most populations, or maybe it's higher IFR (0.5% to 1%) but a very large fraction of people simply aren't susceptible to it. The latter also implies a much shorter path to herd immunity.

Those are extraordinarily dubious studies, rayward.

Both were submitted for publication in late March. They had essentially non-falsifiable premises, because they compared to a "no lockdown" scenario that was purely derived from the model. They didn't make an effort to compare to Sweden or Japan and see what could have been different.

And one of the studies was from the infamous Imperial College team.

It pisses me off to no end that WaPo gave this glowing coverage without asking any questions and that Nature published it. It does actually feel like epidemiologists circling the wagons trying to get ahead of the consequences when people come asking pointed questions about why the hell we listened to them.

I guess I'm too skeptical of this "matching" story. I can see how matching matters for highly paid professionals in office jobs, but I don't see how it can be a major issue for lower-paid wage-workers like the kind you find on cruise ships. Generally speaking, the lower the wage, the more dynamic the workforce because there are fewer job skills involved. And wasn't this the same blog that kept talking about "zero marginal product workers" a few years back? Was that just a matching problem and we didn't realize it until now?

Perhaps on a lot of lower-wage service jobs it's primarily knowledge of what we could call basic jobs skill or character. Know that the person will generally show up on time, will treat customers well, and won't steal from the cash register.

It's lower-risk for an owner bringing that person back than trying to decide if an applicant meets that threshold. Could think of it as an information problem as much as "matching".

When will epidemiologists and infectious disease experts return to "normal" activities in their own lives? Here is a poll of 511 epidemiologists and infectious disease experts: https://www.nytimes.com/interactive/2020/06/08/upshot/when-epidemiologists-will-do-everyday-things-coronavirus.html As reflected in the answers, not yet.

If they can march, they can work.

I saw that. It seems to indicate that epidemiologists as a group are bedwetting, hide under the cover Nervous Nellies. They're also apparently overly willing to harm their children's educational best interests over very low risks.

Unless the NY Times somehow found a sample of 70+ year old epidemiologists with co-morbidities, their responses are absolutely nuts. The answer on getting the mail would be nuts even if they were all older people with co-morbidities.

Fed Policy was less bad in the March-April 2020 than in 2008-09. This time the 5 year TIPS never fell below inflation expectations of zero; in 2008 it did.

+2. Powell and co did a great job on this.

I think the main explanation is that the economic impacts of the pandemic and lockdowns were bad but not as bad as people predicted at first. There were very dire predictions a few months ago about how most small businesses were going to go under—I can’t name one that I personally know that has. To the contrary, I know several that were bracing for huge losses and came away with much more modest losses than they expected. Many businesses adapted to the loss of in-person traffic with more online business, pickup, delivery, etc., which allowed them to retain the bulk of their business. And foot traffic in commercial areas near me already seems to be back to normal—and with the stimulus checks and beefed up unemployment benefits, people have seen a huge increase in personal incomes and that is going to mean pent-up demand as people become less afraid to come back out. Honestly I am more worried about too much demand and inflation/stagflation over the medium term than not enough and deflationary unemployment.

"Bad, but not as bad as people predicted" seems to sum up every news item covered in the media anymore. I think Bryan Caplan is right to mostly ignore the news and focus on long-term trends and analyses.

A number of jurisdictions have declared they will not allow evictions from commercial real estate during the pandemic period. Maybe landlords in other places realize it would be both fruitless (who else are they going to lease to?) and bad press to play hardball with small business tenants.

If you can get away with not paying rent for a while, it is possible to limp along and stay in business. The question is what happens six months from now when these lessors all want to be paid.

If matching important, then we need for UI to be generous and flexible enough to encourage firms to furlough employees during a dip in demand (or a forced closure).

That's also why we need to decouple health insurance from employment.

"That's also why we need to decouple health insurance from employment."

+1, yes this is definitely true.

+2 yes

Good luck getting there.

>What should I learn from this episode?

You should learn that the lockdowns were very obviously a partisan sham.

But we don't have high hopes for you.

non-fact based universe

Partisan extremism is a hell of a drug.

You’re mirror images of each other

Good God man, can't you see how your false equivalence has crashed and burned this week?

Sorry, A., but both IPA and Skeptical are hopelessly lost in believing lies coming out of Trump and Fox News. Trump is now lying at a rate of approximately 22 per day, but they do not notice or do not know or do not care. The rest of us need to really insist that enough is enough if these silly clowns do not. They should be ignored. Neither ever makes an accurate or worthwhile comment here, just useless garbage and lies.

I am hearing from people who should know better that it's over now. And yes it's possible that the President shaped that opinion. It's possible that these protests were functional bipartisan agreement.

Which in my opinion is very sad, because I think the data will show "excess deaths" all year long.

But in the non-fact based universe those excess deaths will be denied.

In BC there is one new case reported, 5 people in ICU and about 350 active cases. People are acting rationally.

California keeps racking up more cases, but people act like they live in British Columbia.

(Trivia, if you say you're from BC in California, some people will think you're claiming to be a caveman.)

California has had months to come up with a plan to address nursing homes. Which is clearly where the issue is.

"California keeps racking up more cases, but people act like they live in British Columbia."

California cases and deaths increases per day:

May 2 to May 8........3.1%.....3.0%
May 9 to May 15......2.5%.....2.6%
May 16 to May 22....2.4%.....2.1%
May 23 to May 29....2.6%.....1.7%
May 30 to Jun 6........2.3%.....1.3%

Of course, California is testing much more than in early May.

Some fine grained data


Maybe I should have said Los Angeles, which was my mental image.

But this article doesn't say anything about the change in the increase in cases over time. Obviously, California and Los Angeles are going to "continue to rack up new cases." That isn't the issue, though.

What to you mean, "Huh"? The article you linked to first didn't say anything about an increasing rate. True, *another* article may.

In the second article, the director of health services for L.A. says the trend is "slightly increasing." In San Francisco a health official "suspects" the rate of transmission is 1.3.

It would be nice to have cases per day/week for those cities to clearly see what the trends are.


You could try being truthful.

I am hearing from people who should know better that it's over now.

They could be watching TV.

We also might be at the point of acceptable risk.

Interesting data on risk here:


The PPP money helped firms to "unfurlough" their workers. But we have no idea if those businesses really re-opened and if the workers had work to do. We'll see when the PPP money runs out in July.

As others have said SBA PPP loans may have a bit to do with this. Up until last week their forgiveness was tied to rehiring employees that were laid off or furloughed. At the outset I thought PPP was an excellent way to mask real unemployment/underemployment.

95% of US residents have not been infected yet. The virus is unlikely to just disappear. We are barely out of the first inning.

Another story might be that all of the regulation waivers allow businesses to be more nimble.

+1 That was my own initial reaction to the article as well.

demand problems are easier to fix through policy than matching problems are

True. But It sounds like something that technology could help to solve. I'm envisioning some sort of employment equivalent of tinder or something. Something that would speed p the process of employers finding people with matching skills and trying them out on a temporary basis before making a permanent hire.

I am in the forecasting game, and I forecasted a 7 million drop in payrolls. Oh well.

There are lessons.

Initial jobless claims failed us as an indicator. They remained very high but falling. But they were likely high because of the enormous backlog in processing unprecedented claims and because some who were laid off waited to file. Initial jobless claims were a lagging, not leading, indicator this time.

Another lesson is a huge amount of very high-frequency data, such as Google and Apple mobility measures, Homebase, credit card data, traffic congestion measures, electrical output, even pollution measures. The high frequency data signaled a recovery in activity. We will rely on that high frequency data more going forward. We may have far more timely warnings of slowing or accelerating activity. The Fed will notice.

I want to refer to the 1957-58 recession. It was short, but severe. Q1:1958 had the most severe one quarter fall in real GDP on record. As you have noted, this recession overlapped with the Asian flu pandemic. The recession was shorter and milder because of the vaccine developed by Hilleman, as you noted. The key point is that there was a fast strong recovery as soon as the pandemic receded. I think it will happen again. The difference is that there were no lockdowns in 1957.

We have an old-fashioned recession. In olden days, the Fed tightened to fight inflation. Housing and consumer durables (esp cars) collapsed, and we got a recession. When inflation fell, the Fed eased, and housing and autos and durables roared back. Workers had a four month vacation and went back to the same old job. Recoveries were very fast and strong.

New fangled recessions are reallocation shocks, like oil shocks or investment bubbles/busts, or fiscal contraction. In those cases, workers and capital have to be allocated. Recoveries can be long affairs.

A pandemic is like a Fed caused recession, with the virus acting like an interest rate. If the virus goes away, we should get a huge recovery.

The danger is the virus is limited but never goes away. In that case, we will have some reallocation as group entertainment services and restauarants and tourism are permanently damaged.

It will be interesting to see what happens to the high frequency data once people are not paid $1,000 per week not to work in addition to receiving $1,200 stimulus checks. No to mention possibly not paying their rent or mortgage. In many cases, if they are rehired, they will be making less money and will have work related expenses- child care, commuting costs, clothing etc.. that are not required to sit at home watching Netflix and punching the buy now button on Amazon.

I will be interested as well to see how small business do without PPP support particularly when their productivity is diminished and expenses are in increased due to COVID safety measures being required.

Next is the retirement offer letters.

Imagine, a work with few-to-no boomers....

But that doesn’t necessarily mean you’ll be retained.

Is this so much of a mystery? The sectors that saw the biggest employment gains were leisure and hospitality, construction, health care and social assistance, retail, and manufacturing.

These are the sectors that would have ground to a halt in March and, now that many states are opening up again, the firms in these sectors have started calling up the workers they laid off or furloughed and asked them to come back.


Dunkin' hiring 25,000 workers amid coronavirus recovery
There. These were really furloughs mis categorized as lay offs. In any event, all parties were agreeing to say home a few weeks and see what's up.

"...since demand problems are easier to fix through policy than matching problems are."

OTOH, matching problems may be fixable with technology. I see lots of technological problems solved these days, not so many policy problems solved: I'm more optimistic of fixing matching problems than policy problems.

Where are the auction theorists when you need them???

I have noted it here a couple of times already, but, heck, I shall again. I am one economist who was not surprised and I have posted on this on Econospeak. I have for some time been posting that the US economy was clearly growing based on such trends in such things as carbon emissions and gasoline demand. I stayed away from making any forecasts on employment because it seemed that things were weird given the apparent disjuncture between ongoing reports of high unemployment claims coinciding with clear evidence GDP was growing.

As noted by me here earlier and other places as well, it is now clear that the disjuncture is explained by hiring data coming out monthly with new unemployment claims coming out weekly, and that we have massive intersectoral conditions in the labor market, with some rehring smartly, even if some of this is shaky as based on finitely available federal money, while others are contracting and still laying off, with some of those possibly about to get a lot worse, notably state and local governments.

"Matching Problem" always struck me as code for "inefficient labor allocation market", which would suggest that companies are not very good labor customers, and workers are not very good labor sellers.

I think this somewhat fits with a hypothetical market model of a ton of tiny inefficient companies providing a product instead a few great big efficient ones - but it also suggests that the fix would be to find ways to increase the scope and scale at which labor can be sold. An organization that could sell the labor of a larger number of workers, even if it was to a great number of mixed customers, should help with this.

Unions, Contract Labor Houses, and Temp Agencies serve in some semblance of this role.... has anyone looked at their impact on the matching problem?

I live in the cooler part of a city and follow a bunch of bars and restaurants on social media. I’ve been a bit surprised how many establishments are hurting for workers. Where did their previous employees go? Are they afraid of COVID19? Did they skip town?

Quite possibly at home making more than they did at a bar/restaurant once the extra $600 / week of UI is included.

I've seen it noted anecdotally by restaurant owners in various news stories: employees won't return once recalled to work.

So that would be my guess, absent an unusual circumstance where you live (such as a college town where students went home).

FWIW, I have not noticed that where I live (Austin), even with bars and restaurants back to being allowed to operate at partial capacity (and with many/most of them doing so).

Are these partnerships a new thing? Could they have helped? https://www.youtube.com/watch?v=EPYIYmzuVR4

I think may be a long time before unemployment returns to normal levels. I keep reading that 4 out of 10 who lost their jobs won't get them back. I think a lot of people who worked at home will stay there, at least part of the time, and will expected to do more.

Companies seem to like having customers but not having employees. They also like working people harder for or the same or less money. When is that going to change?

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