Updated: May 19, 2020
So we did what anyone would do in a time like this...
...make the chart bigger!
But, just how much bigger will blow your mind (ours are).
We began with a chart provided by Real Vision Financial TV (check them out if you are unimpressed with CNBC).
It had historical data of US Initial Jobless Claims going back to the late 1960s provided by Refinitiv Datastream.
Next, we took the consensus high end estimate and plotted a new chart.
US Initial Jobless Claims Estimates are Off The Chart
On the high-end initial Jobless claims (people filing for unemployment each week) is expected to hit around 3,000,000. More sober estimates, like those from Goldman Sachs, are expecting 2,250,000 claims as a result of the Covid-19 shutdowns.
One thing to note, this chart is not adjusted for the employment population size. The peaks in the 1970s would be a bit higher if factoring that in. Regardless, this is almost 5x higher than the peak during The Great Recession (660k).
Also consider this does not include any of the self-employed business owners which are getting hit just as hard, if not harder.
Now the Full Sized Chart....
In case it was difficult to appreciate the scale, here it is side by side.
How do you invest when Unemployment Data is like this?
It is foolish to assume that the upper and lower bounds of the past will hold in the future. Remaining Fully Invested with confidence through any market requires an investment approach that isn't anchored to the business cycle.
"What we don't know is more important than what we do know."
This is something we believe to our core. We coded the investment algorithms we use to manage our own capital with this in mind.
You can see how our Investment Models (CORE and HARVEST), performed through Covid-19 (and other crisis periods) here.
P.S. We also conducted a detailed analysis of how record unemployment rates will/have been impacting mobile home park investors.