Moneybeat – Regional unemployment discrepancies

MARY REICHARD, HOST: Coming up next on The World and Everything in It: The Monday Moneybeat.

NICK EICHER, HOST: Financial analyst and advisor David Bahnsen joins us now from New York City. David, good morning.

DAVID BAHNSEN, GUEST: Well, good morning. Good to be with you.

EICHER: So, I saw the Labor Department report on unemployment that broke down where we’re finding unemployment: different regions of the country. And so the overall 8.4 percent unemployment figure for August, the report showed pockets of higher joblessness in the Northeast and West, but lower in the Midwest and southern states. What does it tell you, David?

BAHNSEN: It’s really actually very simple, in my opinion. What you see is an incredibly disproportionate level of unemployment—even adjusted for population. OK, we already know California and New York are very populous states. Even adjusted for population, an incredibly disproportionate level of unemployment in our country coming from those two states. And what do those two states have in common? Clearly some of the most draconian, stringent, and extended restrictions around economic activity and reopening. It’s having a big impact into the lower income sectors of those two states’ labor markets.

EICHER: And again, we’re talking about that more blunt measure of unemployment, looking backward into August. But I’d like to turn to weekly claims for unemployment benefits—a little more real-time. 


EICHER: …and I’d like for you to tell about the email you sent me last week with the table that showed California accounting for, it looked like, half of the claims for new jobless benefits.

BAHNSEN: Yeah, there was an August filing that showed—this is straight, by the way, on the Labor Department website, what I was directly sending to you, it was not resourced or repackaged. Anybody can go look it up on the internet. 47 percent of the unemployment claims were from the state of California. Now, there’s a little bit of noise in that because Florida and another state only report every other week, so they were showing zero that week and so forth. But regardless, even adjusted for population it was like quadruple the level of unemployment that it should be. And, by the way, California has a 3.6 percent positivity rate. Of all their testing, only 3.6 percent are testing positive. New York is less than 1 percent. So that’s the irony of this is that their very strict standards for reopening churches and schools and economic activity comes with them both having very low COVID positives, yet their contributing mightily to the unemployment problem in the country and they’re doing so to a lower paid portion of the workforce.

EICHER: And then the most recent filing overall—we’re still trending down, though. Unemployment claims coming down, more people going back to work.

BAHNSEN: Yeah, the number that came this week was the lowest number of initial claims since March, but it was still 860,000. So, it was the lowest we’ve seen but it’s still obviously well above averages. A very bad week in pre-COVID world would have been 6 or 700,000, so we’re still way higher than we want to be. But then continuing claims dropped another million. So, them getting to that 12.5 million range is half of the 25 million we were at. I think that number is, by the way, proving to be the most reliable indicator.

EICHER: Continuing?

BAHNSEN: Yes, I’m sorry, the continuing claims, I think, is one of the more reliable. Getting an average apples to apples kind of understanding of where things are because of the different noise that can exist in the monthly BLS numbers and the weekly initial claims. Now, look, the New York Times and Politico, I mean, very left-wing, mainstream media publications ran huge stories this week on significant levels of fraud in the initial jobless claims that are skewing the numbers and not by a little, by millions. So, they had a major issue in California that they think boosted it by 550,000. It’s very difficult to comment with any specificity because we just don’t know what it all means and what they’re going to unpack there, but we’ve talked a lot, if you recall over the months, certain weeks we were surprised where the data was or it didn’t really line up with other data points. It’s starting to kind of make sense.

EICHER: Quickly, then, before I let you go—any changes to the trends you’ve noticed in the stock markets? What’s the market story this past week?

BAHNSEN: Yeah, I mean, no question it’s the exact same as it was last week, which is the challenges in big technology while the rest of the market’s kind of doing just fine. And so you’ve seen a very, very disproportionate effect on the up days, the non-tech stuff is going up more than tech and on the down days, the non-tech stuff is going down way less than tech. So there does seem now to be two or three weeks of confirmation of a leadership transformation. Nothing is dropping significantly. But overall the NASDAQ’s down about 10 percent from its earlier high and the Dow’s only moved a little bit. And I think that speaks to just how maybe undervalued some other sectors of the economy were and how overvalued big technology was.

EICHER: Before I say goodbye for this week, David, congratulations are in order. The Barron’s Top 100 Independent Financial Advisors List had you move up from number 96 last year—you moved up 60 places—now to number 36. That’s great! Congratulations to you and your firm. David Bahnsen, financial analyst and adviser. Grateful for your time.

BAHNSEN: Well, thank you very much. I appreciate it. Very nice of you.


(AP Photo/Bebeto Matthews, File) Marble sculptures occupy the pediment above the New York Stock Exchange signage, Tuesday Aug. 25, 2020, in New York. 

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