Thursday, July 9, 2020
As nearly every Thursday morning in a calendar year, new Initial Jobless Claims have been reported, with results going in the right direction for now 14 straight weeks: 1.314 million on the headline for new claims is also lower than the 1.4 million expected. It’s also respectably down from a downwardly revised 1.413 million two weeks ago.
Continuing Claims were also lower than anticipated (reported a week in arrears from Initial Claims): 18.1 million was down from the shrunken revision the previous week of 18.76 million. It was only a few short weeks ago we were topping out above 20 million continuing claims per week. This is obviously good news. in fact, today’s longer-term claims number is at the lowest level we’ve seen since April 17.
These numbers also partially bear out the relative strength we saw in last week’s non-farm payroll report from the U.S. federal government. For June, we reportedly saw a net gain of nearly 5 million jobs, while the Unemployment Rate came down to 11.1%. Considering where expectations were just a month or two earlier, this is another strong sign of progress on the domestic labor front.
This all said, we’re still looking at millions of Americans out of work for now several months, without a lot of promise that these numbers will continue to dwindle at the pace we’ve seen thus far into the recovery. And keeping this healthier trajectory will depend on a continued successful reopening of the country throughout its various regions, although we can already see some dents in the armor here: with COVID-19 cases rises at a new record pace in heavily populated hot spots like Florida, Texas and California.
On CNBC’s “Squawk Box” this morning, economic advisor Mohamed el-Erian talked about what he sees as a “migration” of unemployment up through different-sized companies — from smaller mom & pop storefronts and restaurants, as we saw in the early stages of the pandemic crisis — to large, publicly traded companies like United Airlines (UAL - Free Report) and Levi Strauss (LEVI - Free Report) . Congressionally passed financial relief programs (along with generous and inventive Fed policy) did a good job keeping our economy from the abyss this spring, but it appears new appropriations will be necessary in order to steer us from disaster going forward.
Of course, market indexes are viewing our post-coronavirus world with rose-colored glasses: the Dow is up 30 points at this hour, the S&P 500 +10 and the Nasdaq looks to open at yet another all-time high, +80 points. Certainly, a COVID vaccine appearing in the relatively near-term would do the world a world of good, and the absence of a second wave of the disease would go a long way toward pushing positive sentiment further. At this stage, however, these may still be a long way off.
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