Here is the Real April Jobs Report: 42 Million Unemployed, 25.5% Unemployment Rate
The comments below are an edited and abridged synopsis of an article by Tyler Durden
A record 20.5 million jobs were lost in the US in April, some 10x more than the depths of the Great Depression, resulting in a 14.7% unemployment rate. The truth, unfortunately, is even worse.
Adjustments to the unemployment rate push the effective number of unemployed to 42 million and the effective UR rate to 25.5%, higher even than the U-6 underemployment rate of 22.8%. Worse, if one treats underemployed in line with the U-6 methodology, the true April unemployment number would rise to 27.5%.
Standard Bank’s chief FX strategist Steve Englander writes that “bad data for the mid-March to April period is largely anticipated by investors; these data were neither good nor bad enough to force investors to adjust expectations.” He expects the May labour data to show deterioration at a slower pace.
Don’t expect a slowdown in the collapse any time soon. White House economic adviser Kevin Hassett has set the groundwork for an even worse number next month as statistics catch up to reality, warning that unemployment could hit 20% in May, up from 14.7% in April, or rather down from the real 27.5% unemployment rate.
Looking at the May data, Englander is also gloomy, warning that initial claims have totaled 7 million since April, and there is no sign that continuing claims are turning down due to rehiring or reopening.
The incoming data look consistent with the baseline UR breaching 20% in May, especially if the responses on ‘employed but not at work for other reasons’ change.
The Trump administration is hoping that the bottom will be in for the economy in a few months; it is also hoping that the official government reports eventually catch up to reality, and that at some point the two—the actual economy and how the government represents it—will converge. The question is when, and just how massive the discrepancy between truth and the official data will grow until that happens.