The coronavirus is about to destroy the scale of economic data. What we was considered a “bad case” scenario or even indicative of times requiring stimulus no longer even computes. So quickly are things turning we almost need a new language to explain it.

One of the most common aphorisms among those dealing with data is that “the trend is your friend”. It is a nice way to note that generally when you see data – such as the unemployment rate – jumping around, the trend, which is essentially an averaged representation of the data, helps you see through the noise.

But occasionally something happens that breaks the trend – such as the boost in retail spending that occurred during the GFC as a result of the stimulus payments:

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The spending was so out of sync with previous levels the trend no longer made sense and the Bureau of Statistics even stopped calculating the trend rate for nine months until normalcy returned.

So that was what happened to some data during the GFC.

But that is not what we are about to experience. We are about to see not the trend broken, but the scale.

Let us turn to the US to see what this will look like.

In states such as California there has been a full lockdown – only essential services open, and everyone has been told to stay inside unless you need to access those services. Schools are closed, shops and places of business are shut.

As a result there has been a wave of people claiming unemployment insurance this week.

And by wave, I mean a tsunami.

Over the past three months, an average of 49,000 people in California applied for the first time for unemployment insurance (known as “initial claims”, as opposed to ongoing ones by people already unemployed).

During the GFC, in the last week of January 2009, 95,000 new people applied; a year later, in the second week of January 2010, 115,462 applied – so more than double what you would expect during good times.

Based on the numbers already announced, former senior economist for labor at the US President’s Council of Economic Advisers, Aaron Sojourner, has estimated in the past week 639,200 people in California will make an initial claim for unemployment insurance:

That is breaking the scale.

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And California is not an exception. Sojourner estimates Pennsylvania will see 353,644 initial unemployment claims this week, some 478% higher than the previous record of 61,181 claims made in the second week of January in 2010, and 2,792% higher than the previous week:

Sojourner estimates this will translate to around 3.3 million Americans making an initial claim for unemployment insurance this week – a number so beyond anything recorded by the US department of labor going back to 1967 that it looks like someone slipped while drawing the graph and left a big vertical line by mistake:

Sojourner estimates that, given there were already 5.8 million unemployed in the US, this would take the US unemployment rate from 3.5% to 5.5% in one week.

Given the news on Monday of queues around the block at Australian Centrelink offices and the MyGov website crashing due to a massive spike in people attempting to use it (up from 6,000 to 55,000) we can likely expect to see similar numbers here.

It is tough to estimate exactly how bad it will be here, but if our total number of unemployed rose by the same amount as is expected in the US in just this week would see unemployment for this month rise to nearly 8%:

Now that is unlikely because we have not yet seen the same level of closures. But not only is it a sign of what is coming, it also highlights the absurdity of the actual term.

To be unemployed is to be “actively looking for work”. But just what work is there to look for right now? Not only are businesses not hiring, many are being forced to not operate. Around 10% of job vacancies each month are for retail trade and 7% are for accommodation and food services, and another 1.5% for arts and recreation. None of these industries is hiring – other than a few supermarkets looking for some extra staff to help pack shelves.

Currently the government has kept some mutual obligations in place, but it is pretty obvious things have changed and changed drastically. Actively looking for work? Nope. Unemployed? Most definitely.

The scale has been broken, and so too have the definitions.