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Is The Next Great Depression Here?

Jobless claims undo decade's worth of employment gains



Millions of Americans join unemployment line as coronavirus savages economy

A stunning 26.5 million Americans have sought unemployment benefits since mid-March, confirming that all the jobs gained during the longest employment boom in U.S. history have been wiped out as the novel coronavirus savages the economy.

The deepening economic slump amid nationwide lockdowns to control the spread of COVID-19, the potentially lethal respiratory illness caused by the virus, was underscored by other data on Thursday showing business activity sinking to an all-time low in April. In addition, new home sales decreased by the most in more than 6-1/2 years in March.

?At this point it would take a miracle to keep this recession from turning into the Great Depression II,? said Chris Rupkey, chief economist at MUFG in New York. ?The risks to the outlook are that the economy is digging itself such a big deep hole that it will become harder and harder to climb back out of it.?

Initial claims for state unemployment benefits totaled a seasonally adjusted 4.427 million for the week ended April 18, the Labor Department said. That compared to 5.237 million in the prior week. Economists polled by Reuters had forecast 4.2 million claims in the latest week.

Since March 21, 26.453 million people have filed claims for unemployment benefits, representing 16.2% of the labor force. That has led to dire predictions of 30 million job losses during the COVID-19 pandemic and an unemployment rate at levels not seen since the Great Depression. The economy created 22 million jobs during the employment boom which started in September 2010 and abruptly ended in February this year.

The rising tide of grim economic numbers has been met with protests, which have largely been viewed as political, for states and local governments to reopen non-essential businesses. President Donald Trump, who is seeking a second term in the White House in November?s general election, has also been growing anxious to restart the paralyzed economy.

A handful of Republican-led states are reopening their economies, despite warnings from health experts of a potential new surge in infections. Economists also warn that there is no guarantee that Americans will feel safe to visit shopping malls.

?Today?s report shows the labor market is almost certainly pushing into new territory, jolting the unemployment rate up above the Great Recession?s 10% peak and wiping out more jobs than we?ve gained in the recovery,? said Daniel Zhao, senior economist at Glassdoor, a website recruitment firm.

In a separate report on Thursday, data firm IHS Markit said its flash U.S. Composite Output Index, which tracks the manufacturing and services sectors, plunged to a reading of 27.4 this month, the lowest since the series began in late-2009, from 40.9 in March.

New home sales fell 15.4% to a seasonally adjusted annual rate of 627,000 units in March, the Commerce Department said in another report. The percentage decline was the largest since July 2013.

RAPID DETERIORATION
The deteriorating economic data reinforces economists? contention that the economy entered recession in March.

The National Bureau of Economic Research, the private research institute regarded as the arbiter of U.S. recessions, does not define a recession as two consecutive quarters of decline in real GDP, as is the rule of thumb in many countries. Instead, it looks for a drop in activity, spread across the economy and lasting more than a few months.

Last week?s claims report covered the period during which the government surveyed business establishments for the nonfarm payrolls component of April?s employment report. Economists are forecasting as many as 25 million jobs were lost in April after the economy purged 701,000 positions in March, which was the largest decline in 11 years.

Though weekly jobless filings remain very high, last week?s 810,000 decrease in claims marked the third straight weekly decline in applications, raising hopes that the worst may be over. Weekly claims appeared to have peaked at a record 6.867 million in the week ended March 28.

Stocks on Wall Street were trading higher as investors focused on the weekly decline in claims. The dollar slipped against a basket of currencies. U.S. Treasury prices were trading mostly lower.

Florida, which together with Tennessee, South Carolina and Georgia is reopening businesses this weekend, continued to see a surge in claims last week. But New York and Michigan reported fewer applications. Georgia reported a drop in claims.

The overall decrease in claims has been attributed to difficulties by states in processing large volumes of applications and a historic $2.3 trillion fiscal package, which made provisions for small businesses to access loans that could be partially forgiven if they were used for employee salaries.

An additional $484 billion in a fresh relief package for small business loans is expected soon. The handful of states easing restrictions could serve as a barometer for the overall economy when it reopens.

?We would assume jobless claims will fall back sharply here, but if consumers remain reluctant to go shopping or visit a restaurant due to lingering COVID-19 fears, then employment is not going to rebound quickly,? said James Knightley, chief international economist at ING in New York.

?As such it would be another signal that a V-shaped recovery for the U.S. economy is highly unlikely.?

With weekly claims stabilizing, the focus is shifting to the number of people on unemployment benefits rolls. The so-called continuing claims data is reported with a one-week lag.

Continuing claims jumped 4.064 million to a record 15.976 million in the week ending April 11. Continuing claims have not increased at the same pace as initial jobless applications.

Economists believe some people thrown out of work because of state-mandated ?stay-at-home? orders found employment at supermarkets, warehouses and delivery services companies. They expect the unemployment rate will shatter the post-World War Two record of 10.8% touched in November 1982.

The jobless rate shot up 0.9 percentage point, the largest single-month change since January 1975, to 4.4% in March.

https://www.reuters.com/article/us-...reat-recession-employment-gains-idUSKCN2250CS
 
Crazy times- but life will continue - maybe a bit different -but things will get back to a " new normal "
 
The economy is already bouncing back.

Look at the market.

Before this year is up the stock market will be 15-20% higher than its best previous performance. Maybe within 3 or 4 months actually.
 
The Rise And Fall of USPS

 
Loans Intended For Small Businesses To Retain Workers Were Hijacked By Large Corporations And The Rich


The Paycheck Protection Program, part of the multitrillion dollar government stimulus package, was primarily intended to help small businesses retain workers. The loosely managed and poorly regulated process was perverted and hijacked by thousands of companies that gamed the system. Through technicalities and loopholes in the program, the sloppy roll out was marred by too-little oversight and the allowance of large corporations, hedge funds, money managers, law firms and fast food chains to receive millions of dollars in forgivable loans.

The concept of PPP was laudable. In the teeth of the Covid-19 pandemic, small businesses that were deemed nonessential were ordered to cease operations. This placed thousands of small and midsized companies in a perilous position. With the sudden shocking lack of customers plummeting revenue, evaporating profits and still bills to pay, many small businesses faced financial ruin.

The federal government previously offered enhanced unemployment benefits to workers that lost their jobs due, in large part, to the economic effects of the virus outbreak. In an effort to both keep the doors of small businesses open and as an enticement to retain workers and keep them employed, the PPP was put into effect. Companies were offered the opportunity to apply for a forgivable loan. There wasn?t a lot of red tape and the major requirement was a promise to retain employees for a specified time period.

Unfortunately, the lion?s share of the funds went to companies that didn?t fit into this profile. The program was rushed out and handed off to Treasury Secretary Steven Mnuchin to manage the process and oversight. Mnuchin then passed it over to the banks. They became in charge of the review, approvals and underwriting the loans.

There were angry complaints, especially during the initial rollout of the program, that the intended recipients?small and midsize businesses?were shut out. Within days, the initial funds were sucked up by large organizations. These corporations boasted sharp lawyers, accountants, political ties and already held close relationships with banks. They easily cut to the front of the line. Facing pressure and public embarrassment, a number of organizations said that they?d return the funds.

A second phase of PPP was enacted. Once again, heated complaints of cronyism arose. This placed pressure on the Trump administration to reveal which companies received loans from the $660 billion program intended to keep small businesses afloat.

According to the Washington Post, ?Among the loan recipients, 48,922 reported zero as the number of jobs they would retain with the money, and 40,506 applicants appeared to leave that section blank. It appeared that 10 other companies received between $5 million and $10 million, but reported retaining only one job with the money they received.?

Without the PPP loans, the number of people claiming unemployment benefits would have substantially increased. In light of the resurgence of Covid-19 cases, calls for reclosing businesses and a still weakened economy with little demand from consumers, many of the companies that accepted loans will lay off workers as soon as their restrictions are lifted.

There is another beneficiary of the loan program. Banks stand to see a windfall of billions of dollars in fees paid directly by the Small Business Administration. The top 10 bank lenders, according to S&P Global Market Intelligence, will receive about $3.8 billion.

Here are some of the not-so-small companies that received money from the PPP:

Billionaire Kanye West's Yeezy brand borrowed between $2 million and $5 million. There?s no word yet if this money will go toward his newly announced run to become the President of America.

A major law firm with ties to President Trump, Kasowitz Benson Torres, received a loan for between $5 million and $10 million.
$350,000 to about $1 million was given to Esplanade Livingston, a Jared Kushner family entity. Kushner previously divested his stake in the entity.

A real estate entity owned by various members of the Kushner family, Princeton Forrestal, received a loan of between $1 million and $2 million.

The uber-powerful and successful law firm, Boies Schiller Flexner, received between $5 million and $10 million.

United States Transportation Secretary Elaine Chao?s family?s business, Foremost Maritime, received $350,000 and $1 million. Elaine Chao is married to Republican Senate Majority Leader Mitch McConnell.

Trucking company Perdue, cofounded by Agriculture Secretary Sonny Perdue, got roughly $150,000 to $350,000 in loans.

Restaurant chains P.F. Chang?s, China Bistro and Chop?t received between $5 million and $10 million.
Private equity-backed TGI Fridays realized at least $5 million.

The Archdiocese of New York received between $5 million and $10 million. The Catholic Charities of the Archdioceses of San Francisco, Washington, D.C., New Orleans and Boston all received loans valued at over $2 million.

Ironically, self-reliant, libertarian-oriented the Ayn Rand Institute got $350,000 to $1 million.

Joseph Kushner Hebrew Academy in New Jersey received a loan of about $1 million to $2 million. The academy is named after President Trump?s son-in-law Jared Kushner?s grandfather.

Alamo Drafthouse received a loan of about $5 million.

News organizations such as the Washington Times got at least $1 million, the Washingtonian $350,000, the Daily Caller received about $350,000 and the American Prospect received at least $150,000.

Political organizations, including the Ohio Democratic Party, got at least $150,000 and the Florida Democratic Party Building Fund received at least $350,000.

The National Republican Club of New York realized at least $350,000 and the Black Republican Caucus in Florida recognized at least $150,000.

Members of Congress received loans too. Republican Representative Kevin Hern of Oklahoma, who owns KTAK Corporation, received between $1 million and $2 million. Republican representative Mike Kelly from Pennsylvania received a loan for his car dealerships.

Democratic House Speaker Nancy Pelosi?s husband, Paul Pelosi, received a loan.

Republican West Virginia Governor and billionaire Jim Justice received between $11 and $24 million for his portfolio of companies.

The list is much longer, but I don?t want to raise your blood pressure higher.

https://www.forbes.com/sites/jackke...large-corporations-and-the-rich/#335d3b0b316d
 
I have heard of a lot of corruption in the PPP loan program, but I also see and read of prosecutions and some like Ruth's Chris giving the money back. I hope there will be a reckoning for those who took money they did not deserve. I can also say that my company received a pretty good chunk and it was used to pay employees and keep them working. We've actually had more payroll expense than the PPP loan which should mean it will be converted into a grant. Sweet as far as I am concerned! A lot of the credit for my experience has to go to my bank, you so often hear about banks being ruthless and not caring about their customers and only about making more money. My bank worked 24/7 weekends included to get the proper paperwork submitted and approved. They were awesome! So yeah there is a lot of bad shit out there, but it is not all bad, there are also a lot of successes and a lot of businesses that have and will benefit from the PPP program.
 
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