04/02/2020
I wanted to send a quick update on this morning's unemployment claims report. The surge of Americans filing for unemployment insurance climbed sharply last week as more than 6.6 million new claims were filed, the Labor Department reported Thursday. That brings the total to 10 million Americans who filed for unemployment benefits over the past two weeks.
As I have indicated in my previous messages to you, the impact of the COVID-19 on the U.S. economy will be significant and we must be prepared for truly shocking economic data. Some of this discouraging data will far exceed anything we have ever witnessed.
In the case of the weekly unemployment claims numbers, before the coronavirus shut down major parts of the economy, the highest week for claims was 695,000 in 1982. The Great Recession high was 665,000 in March 2009 (CNBC).
The number of individuals seeking unemployment insurance is sure to rise in the weeks ahead. Government legislation recently signed into law provides $2.2 trillion in relief and allows workers to stay on unemployment longer and expands the scope of those who can receive benefits.
The economic impact of this crisis will be stunning, but not unexpected. It will be important for us to evaluate the data with perspective, and in the context of the unique nature of the crisis. This is now a matter of time and public experts are rapidly developing various models forecasting when the COVID-19 outbreak might begin to recede. Until then, the economic reports will be alarming.
Traditional interpretation and reaction to negative economic data may be counterintuitive for a while. Equity markets moved higher following this morning's claims report. The conventional relationships between economic data and capital markets will be disrupted for several more weeks, if not longer.
John
PS. I will be hosting Clearwater Capital's first ever all-client conference call tomorrow morning. If you would like to join us for this presentation, and have not yet registered, please click here: (CCP Conference Call)