That is exactly what it means in most circumstances. Businesses that had to close weren't willing, or able, to continue keeping people on the payroll without PPP. Many businesses laid off employees only to bring them back (despite being closed and having no work for them) because the PPP gave them surplus money for doing so.

An employee who was kept on because it was free is definitely at much higher risk than normal to be laid off when the stimulus runs out, even though the business has reopened.

The point is that you have to quantify what "most" means here.

You're only considering one specific scenario - the eligibility criteria stipulated that your business had to be affected - it didn't have to be closed. Feel free to do the math but the point is that this is hard to quantify.

There's no math necessary. Per the BLS:

The point, again, is that you don't know how many of these 2.7 million were rehired just because it's free and will be let go once the the money runs out. Maybe some of them were rehired for reasons that have nothing to do with PPP. Maybe some of them were rehired mostly because of PPP, but will be kept on the payroll because the business will resume by the time the 8 weeks or whatever runs out.

And this is exactly what everyone was expecting in terms of the overall employment situation right? Lots and lots of people were laid off "temporarily" but we were all pretty sure not all of them will end up getting their jobs back, as some of these sectors will be affected severely even past the lockdowns. As the recession percolates through the economy, businesses that weren't as directly affected by the shutdown will see a decrease in demand for their goods and services and adjust staffing accordingly. So temporary unemployment will decrease over time but non-temporary unemployment will increase (though by a lesser amount).

Candy,

You're shifting the goalposts. River asked if the drop in unemployment was due to the government paying businesses to rehire employees. The answer is yes.

You replied that it's impossible to distinguish whether the drop is due to that or real hiring. The BPS report I quoted makes it very clear that more than 100% of the drop in unemployment is due to bringing back employees temporarily laid off. Real unemployment continues to rise.

You don't have to do any math. Simply look at the chain of events and use logic.

In March and April the country shut down, unemployment skyrocketed. The government then issued a giant stimulus package with the caveat that employers must rehire the employees they laid off. The next month unemployment drops by 2.7 million exclusively amongst those people who were just temporarily laid off and the government said must be rehired to receive free money.. There's no other reason for that sudden drop except for stimulus money.

Glad I'm not the only one who notices this.

No I'm not shifting the goalpost, you're simply not understanding the point here. With or without the government paying businesses to rehire employees, the drop in the unemployment rate is going to come from bringing back employees temporarily laid off. Why? Because that's where nearly all of the increase in unemployment is. In the April report, roughly 18 million people were "temporarily" unemployed and 2.5 million were "permanently" unemployed. As we come out of the lockdown, of course we'd see a drop in the temporary category, as businesses reopen. And 2.5 million permanently unemployed is not that much higher than pre-COVID #s of 1.9 million. Of course this number is going to go up, as previously "temporarily" unemployed people get reclassified and others get laid off. Hence, you cannot distinguish, based on these numbers alone, how much of the drop is due to the government paying businesses and how much of the drop is due to real rehiring. In the absence of PPP, you'd see the same trend, though the absolute #s may look very different.

If you mean to exclude temporary unemployment, the level of unemployment is very low right now. The reason why people are worried about the overall unemployment rate is because we suspect much of the temporary unemployment is only classified as temporary because some people/businesses don't know whether the arrangement will become permanent. Most people are expecting the unemployment rate to be higher than 10% at year end. You can't get there without a significant increase in permanent unemployment.

Again, the point isn't that this didn't have any impact, but you have to quantify the impact. You can't just handwave away the positives and attribute them entirely to some plausible story you came up with. That's not how you do anything.

Why? Businesses could be reopening or preparing for reopening. Looks like lots of states started reopening late-April or early/mid-May. The job report I think as a snapshot as of 5/12 or so and so would be significantly affected by this change.

https://www.cnn.com/interactive/2020...onavirus-trnd/

I am not surprised you're taking a random shot without even reading through any of this, which is quite reflective of the general quality of your contributions. This isn't even a matter of opinion here - I'm 100% correct here and it has nothing whatsoever to do with any disagreement on the market or macro, whereas at least on some of the other topics, I can see why reasonable people could plausibly disagree.

It's indisputable that the drop in temporary unemployment cannot be entirely attributed to the government paying employers to rehire without further work. A big company that operates in many states that have reopened doesn't qualify for PPP, but it will rehire some of the temporarily laid off people as part of the reopening plan.

de captain,

I think my last response should mostly explain everything, but if that's not enough, here's another way to think about it. if your hypothesis was false, what would you see in the report? If PPP didn't work at all for some administrative reasons, but the reopening led to solid real rehiring, how would that be reflected in the job report?

Candy,

You make a lot of calls for other people to do the math despite never doing any yourself.

Lets try another tack, including some back of the envelope math. By my math the portion of the PPP which had to be spent on payroll (60%) was enough to pay well over 50 million people for 8 weeks (probably closer to 100 million, I'm being very generous with pay rates despite most of those losing their jobs being minimum, or near minimum wage).

The government spent enough money to pay way more than 50 million people. 36 million people lost their jobs. Now only 2.7 million people have gotten their jobs back.

Less than 8% of the unemployed got their jobs back despite a stimulus plan that allocated enough funds to pay probably 2x as many people as those who lost their jobs. Of that 8% you want to allocate an appreciable amount to real recovery, as opposed to realizing the number should have been much larger simply based on the government paying everyone's salary for 2 months.

This is irrelevant to what we're seeing. I think in that hypothetical it's very possible that unemployment would flatline where it is, or possibly even continue to rise slowly.

Many businesses have closed for good and those jobs aren't coming back. Many more businesses will continue to close over the coming months as they come to the realization that they're no longer profitable in this new environment. Other businesses will restructure with less employees and tighten their belts. Further still, there are many jobs which aren't coming back now but will begin to come back in 12+ months.

Without the government paying everyone's salary it's entirely possible that unemployment would continue to slowly rise despite the gradual reopening we're experiencing now. Without trillions in stimulus we'd be in a much worse downward spiral, in which unemployment wouldn't just begin to reverse the moment we start reopening the economy.

You're now agreeing with me that you have to do the math and make a bunch of assumptions in order to answer that question - just saying there was a reduction of 2.7 million in temporary unemployment doesn't really answer that question. Maybe the impact is 500K, maybe the impact is 2M, maybe the impact is 10M. It's also important to understand that the April report isn't a good baseline - PPP was already influencing April numbers and it's like that between April and May reports, we may have hit an unemployment rate that was much higher than either April or May report, as we're in a highly dynamic situation. Again, the whole point is that you cannot answer that question to any useful degree without thinking through all these.

Now that we're on the same page, you can go back and read my first reply, where I addressed some possible pitfalls - we don't really know what employers would be doing in the absence of PPP. The fact that I will take advantage of PPP for my business doesn't mean I didn't need my employees. And even if PPP is the sole reason why I kept some employees on the payroll, but by the time it runs out, maybe my business has already reopened and it turns out I need them anyway. So in that particular case, it doesn't matter too much that I didn't need them in the mean time, it was just unemployment benefits by another means. The main reason why people are concerned about this is that this may predict further softness later when the funds run out right? But we have no good way of predicting this looking at the job report. This is obviously something everyone's already thinking about and is probably best analyzed on the demand side - how much activity do we expect in various sectors and how many people do we think these different sectors will have to let go to make things work?

I'm personally not doing the math here because I don't think it's really worth doing it - I was basically warning against this analysis and was effectively saying you shouldn't expect to see anything concrete with this line of thinking.

Let me rephrase this. You were saying earlier that a large decrease in temporary unemployment + a slight increase in permanent unemployment mean this is basically driven by the government paying employers. If you didn't know if PPP worked or not and you didn't know if the businesses are hiring for real or not, what in the job report would make you think, it's not just PPP, the businesses must be hiring for real?

Lol Candy. No, I'm not agreeing that you need to do the math. It's very simple and common sense. I did the math for you because of your inability to see what's going on.

A very simple question was asked. The answer is quite simple. You claimed it's impossible to answer. After being shown the answer you've tried to overly complicate the topic all while handwaving and admitting you won't do the math.

So where's my answer then? How many people were employed as of the May job report solely as a result of PPP? And how did this change from April?

Completely irrelevant. You don't need to solve hypotheticals lacking information when you have information.

I told you, and I did the math. The answer is all of them. If you disagree stop handwaving and do the math.

I asked how many were employed due to PPP - I assume you didn't mean to say all 137 million civilian employees were employed solely due to PPP. If what you meant was that the difference from April to May (2.7M) was solely due to PPP, has it occurred to you that PPP influenced April numbers too and the range here isn't from 0 to 2.7M? It can easily be negative (maybe PPP had a greater impact in April) or greater than 2.7M (maybe we would've seen a substantial increase in temporary unemployment without PPP).

de captain, so is your contention that based on your math, the impact here is exactly 2.7M? Your math already shows that most of the money didn't go to that 8% - so it must have gone to people that were employed in both April and May reports - why are you so sure then that the difference between the impact of PPP in May vs the the impact in April is exactly the difference between May and April temporary unemployment?

Candy,

You continue to dance around. Your new qualifier of "exactly" has absolutely nothing to do with the original question, topic at hand, implications, or how we got here. A particular narrative is being pushed. The administration does know the exact math. The fact that they've, like you, chosen to obfuscate it gives us the answer to the original question.

If you want to have an honest discussion of topics you need to bring something to the table. Accusing everyone of handwaving and refusing to do the math, while you jump around the field, waving your hands, refusing to do any math, all while you offer up nothing in return isn't particularly engaging.

You either understand the implications, which don't align w/ the narrative you've been pushing since you started posting here, or you don't. If you have a position then elucidate it.

Would you agree that the drop in unemployment is due to stimulus, economic growth, or some combination thereof?

It's not random. You do it a lot. At least a dozen times in our long conversation.

You consistently move the goal posts and then claim you have won, but that's not winning. It's changing the argument the other guy thought he was having. You obviously underestimate the intelligence of other people here if you think that works.

What on earth are you talking about? This isn't about my opinion of the May job report. This is about you randomly jumping to nitpick my general assessment that this isn't a fruitful line of inquiry, then being wrong about it. You've offered exactly zero insight - I still don't know if the April to May difference in PPP impact is below zero, between zero and 2.7M or above 2.7M. You also haven't explained why this even matters at all - like we were aware that PPP existed before the job report, right? This isn't some kind of new information - both April and May unemployment figures are obviously cushioned by PPP, everyone knows this, that was the whole point of PPP.

As for what I think about the job report, I already said it doesn't actually look that great and the main takeaway is that we avoided a negative surprise. I don't really understand where you are going with this. This is how this conversation started:

All you seem to be saying is that PPP worked in some way and if there isn't further stimulus, things may get worse. What does that have to do with the job report and the April to May difference in particular? And how does your math answer any of these questions?

I suspect this is your problem here, because you're pushing a particular narrative and working backwards to support that narrative no matter what, you assume that's what I'm doing and just push back as though it's some religious argument that where you're pushing one viewpoint and I'm pushing another viewpoint. I'm not pushing anything - just pushing back against flawed reasoning. The lack of rigor is what I find problematic. If you actually pay attention, you'd find that I've been fairly neutral the entire time, only pointing out relatively flaws in specific narratives being pushed, and instead of pushing specific narratives myself, generally opting to offer frameworks to help anchor such arguments. To me, what's important isn't whether the economy is good or bad now, or the market will go up or down, but rather having a consistent way to think about these kinds of things that can be applied to other situations. Just because there are tons of awful takes on the macro and the stock market here on the bear side and I opted to correct them doesn't mean I hold the opposite viewpoint. You should be able to construct a bear argument that I find compelling - I just haven't seen one here.

More specifically, you can't just come up with a story (PPP boosting employment), realize that this is a potential explanation for some empirical observation (the 2.7M increase in temporary unemployment from April to May), then just attribute the latter to the former, without being able to quantify the impact or examining other factors. I guess you could do that, but that limits the effectiveness of your analysis and ultimately your ability to understand things. You're just assuming the conclusion and never rigorously testing any of your preconceived notions.

Again, I'm not motivated one way or another, but I suspect that you're making these errors (did it not occur to you to consider that both job reports are affected by PPP) because you are motivated. You were sure things are bad, but the job report says things aren't that bad, so you're uncritically accepting theories that reconcile these two. I could be wrong here but I don't see how any neutral person would consistently make mistakes in one direction.

The conversation started when another poster asked the question of whether or not the unemployment figures included the PPP cushion. Everyone doesn't know this. Someone not knowing is literally how we started down this path to hell.

If you took a poll today amongst the general American population I'd be willing to bet my bottom dollar that "most" Americans don't understand this. Most Americans believe that it's entirely economic recovery. Most Americans probably couldn't define economic recovery either but, like porn, they know it when they hear it described as unemployment falling by nearly 3 million, a month after hearing it grew to 36 million.

The point is that most Americans see that unemployment dropped bigly and draw the conclusion that the economy is quickly getting back to the best the world's ever seen. When actually if you think about it for a minute it's really pretty bad.

When River posed the original question, he also said that if it includes the PPP that's not real. Your response to him was to say that you can't draw that conclusion, by virtue of the type of hiring being indistinguishable.