Axios Markets

While economists predict that today's nonfarm payrolls report will show around 20 million Americans were unemployed in May, it's likely the real number is close to double that.

• Data show more than 37 million have applied for or are receiving some form of unemployment benefits as of May 30, meaning the unemployment rate was at least 24% and likely above 30%.

Why it matters: Traditional economic reports have failed to keep up with the devastation of the coronavirus pandemic and have made it nearly impossible for researchers to determine the state of the U.S. labor market or the economy.

How it works: The Labor Department’s surveys capture the period through the 12th day of the month, excluding job losses after that date. To calculate a closer estimate of U.S. unemployment Axios added...

• The Labor Department's continuing jobless claims up to May 23.
• Continuing claims for the newly created Pandemic Unemployment Assistance (PUA) program through May 16.
• Initial claims for both programs during those periods.
• Other unemployment programs, including newly discharged veterans and the Pandemic Emergency Unemployment Compensation program.

The big picture: Even these more comprehensive estimates likely miss the mark, as not every state is providing PUA figures.

• Plus, there remains an unknown number of people who have either not applied for unemployment benefits, have tried and failed, or who have applied but have not had claims processed yet.

What it means: While it's likely many Americans have returned to work, the increase in initial claims and consistently high level of continuing claims suggest the problem did not improve in the back half of May after many states began removing "stay at home" orders.

State of affairs: A survey of more than 88,000 small businesses by online business network Alignable from May 23–25 found 68% are open now, but 28% were offering fewer products or services.

• 3% of firms surveyed said they had closed permanently.
• Less than 50% of customers have returned, firms say.
• Only 47% employees are back on payrolls, with 7% more expected to be hired by the end of June.

What they're saying: Some business owners said they were "bleeding slowly" with increased operating costs for social distancing measures, masks and PPE for staff along with decreasing revenue.

• “We are thrilled that we are open again," Jane, a gallery owner in California, said in the survey. "We've had to reduce our open hours so that we can do cleaning. But we’re ready and excited to have customers.”
• “The wedding industry is almost non-existent," Maxine, a bridal and event coordinator in Texas, said. "People are too afraid to celebrate.”

The Economic Policy Institute attempted to quantify the number of unemployed who were missed in the Labor Department's April jobs report.

What it means: This “adjusted” unemployment rate includes those who are officially counted as unemployed as well as what EPI senior economist Elise Gould calls the "misclassified" — those who reported that they were employed but not at work for other reasons, and those who had been employed but left the labor force when the virus hit and are not actively seeking work.

Details: "Millions of would-be job seekers have left the labor force in the time of COVID-19 for various reasons, whether it’s because they don’t see any prospects in their occupation, they are not looking because they are concerned about their health or the health of members of their household, or they have to care for a child whose school or daycare closed."

The European Central Bank will increase its Pandemic Emergency Purchase Programme by $672 billion, taking the total to 1.35 trillion euros, and extending the duration of the program from the end of 2020 until June 2021, or until the bank believes the crisis is over. (CNBC)

Hedge funds are gearing up for another downturn in the stock market after growing uneasy that surging prices do not reflect the economic problems ahead, but many are apprehensive about going short. (FT)

Simon Property Group is suing Gap Inc., its biggest non-anchor tenant, for failure to pay $66 million in rent and other charges for April, May and June. (The Real Deal)

U.S. banks had a fantastic first quarter in terms of new deposits, with the top 50 banks adding nearly $2 trillion of assets, more than 10 times the average quarterly increase for the entire banking sector.

What happened: The 50 largest U.S. banks added $1.853 trillion in assets during the first quarter, a report from S&P Global Market Intelligence shows.

• That compares to an average of $142 billion in assets added each quarter dating back to 1999 and an average of $118 billion increase since 2009, according to an Axios analysis of banking data produced by the Fed.

Highlights: All but six of the 50 largest U.S. banks reported an increase in assets during the first quarter.

• JPMorgan Chase, the country's largest bank by assets, reported a $452.05 billion increase in assets in the first quarter, which was larger than the total assets held at all but nine U.S. banks.
• Bank of America, Citigroup and Wells Fargo reported increases of $185.88 billion, $268.61 billion and $53.79 billion, respectively.

Between the lines: A separate report from S&P earlier this week found that close to 1,000 credit unions reported a net loss in the first quarter.

• "Specifically, 982 credit unions representing 18.5% of the industry lost money during this time period, up from 15% in the first quarter of 2019," S&P Global Market Intelligence noted in the report Tuesday.

A major reason banks were rolling in so much dough last quarter is the explosive growth of the U.S. personal savings rate, which hit the highest since the 1980s in March and a historic 33% in April.

By the numbers: The rate of savings as a percentage of disposable income was by far the highest since the Bureau of Economic Analysis started tracking it in the 1960s.

• The savings rate has jumped to almost double the previous record of 17.3% in May 1975.
• Spending declined by a record 13.6% in April.

Yes, but: There is an aspect of “forced savings,” Diane Swonk, chief economist at Grant Thornton, told CNBC. 

• “There’s not much opportunity for many people to go out and spend money," Megan Greene, a senior fellow at Harvard Kennedy School, told CNBC.
• “With shops all closed and everybody locked up, the ‘shopportunities’ have dried up. That speaks to a kind of demand shock.”

Yes, but, but: Many economists have worried about the coronavirus pandemic leading to a more structural change in saving and spending habits leading to a permanently higher savings rate.

• During the 1970s, the savings rate was consistently around 14%.

The big picture: The U.S. economy is much more dependent on consumer spending than it has been historically, and that is especially true now.

• Businesses are looking to bounce back from losses suffered during government-imposed lockdowns to contain the COVID-19 outbreak and will need savings rates to fall back quickly and for consumers to return to previous spending patterns.

Shares of American Airlines soared on Thursday, rising 41% to a three-month high after the airline said it expects capacity to rise in July to 55% of where it was in the same period a year ago.

• The company also expects to fly about 20% of last year's international capacity next month.
• It said the average load factor has improved to 55% for the May 24–May 29 period, compared with 41% for the May 1–May 23 period and 15% for April.
• American plans to reopen 11 Admirals clubs in 10 cities on June 22.

Where it stands: The stock is still 43% below where it was one year ago and remains down 42% from where it started the year.