“Whatever communication we need to move forward, that will be happening”, Nancy Pelosi told reporters on Thursday, referencing discussions between Richard Neal and Steve Mnuchin on how to fund an infrastructure bill that’s expected to be the cornerstone of a “phase four” stimulus initiative once lawmakers return to D.C. later this month.
Pelosi and Mnuchin spoke on Wednesday night and talks are ongoing, something Donald Trump is keen to facilitate as evidenced by his (loud) calls for a multi-trillion dollar infrastructure program to help resuscitate a US economy which, much like too many Americans, will need to be put on a ventilator before long.
US jobless claims surged by 6.65 million in the week through March 28, Thursday’s report showed. That was double the previous week’s total, which was itself quadruple the old record. “We’re not in Kansas anymore”, folks.
This takes the two-week total to 10 million.
Thomas Costerg (at Pictet Wealth Management) predicted 6.5 million people would file for unemployment benefits last week. His forecast was an outlier, but even it proved to be too optimistic. “I never thought I’d see such a print in my lifetime”, he said Thursday, adding that unemployment may well spike to 20%.
For those curious, the states with the most claims and the largest week-over-week jump in claims are also some of the states with the highest COVID-19 infection totals. Of course, those totals are also related to population and the employment situation in Texas is clearly impacted by the plunge in oil prices, but the point is, comparing jobless claims to case totals is an exercise worth doing.
New York, New Jersey, California, Michigan and Florida were the top five coronavirus “hot spots” in the US, in that order, as of April 2. Georgia was 11th on the list and Texas 12th.
BofA was out Thursday sounding particularly downbeat.
“We now believe that there will be three consecutive quarters of GDP contraction with the US economy shrinking 7% in 1Q, 30% in 2Q and 1% in 3Q”, the bank said, adding that “we forecast the cumulative decline in GDP to be 10.4%… the deepest recession on record [and] nearly five times more severe than the post-war average”.
The bank goes on to caution that “the real time data on the consumer have been particularly worrisome”.
They cite their own proprietary aggregated card data for the second half of March, the dramatic drop in auto sales and “measures of daily consumer sentiment”, which BofA says “show a decisive shift lower in confidence at the end of the month”.
The bank calls the surge in jobless claims “incredible” and projects “between 16 and 20 million jobs could be lost, sending the unemployment rate to a peak of 15.6%”.
Meanwhile, state and local government layoffs are mounting.
“Pennsylvania laid off 2,500 seasonal, temporary and part-time employees, along with interns, due to the ‘unprecedented impact’ of the virus [while] Wichita, Kansas, has implemented a hiring freeze and a furlough that will affect roughly 300 employees”, Bloomberg writes, in a short, but poignant piece out Thursday, adding that Cincinnati, Ohio, “decided to furlough as many as 1,700 workers after revised budget estimates projected a $27.5 million deficit, a stark reversal from the previous estimate of a $24 million surplus”. The Mayor cried while making the announcement.
We better get moving on that infrastructure proposal.
What is not being advertised by the powers that be is the process to file for unemployment benefits is breaking. After speaking with individuals that have tried to file online and failed then had to wait 4 hours on hold, benefit checks may take weeks into months to go out because the system is inundated.
You also cannot get ahold of anyone at your bank or credit card companies. Nor for that matter your mortgage company. Hell I cannot even get medical reimbursement from my flex account because the offices are closed for at least two weeks. If this hits you financially you are S O L. Sure there might be fancy bills and systems to help you but you better have a couple months food on hand in the mean time.
I can not bring myself to invest into this mess for the foreseeable future.
I will add, however, I am struggling to see what my, and my loved ones, lives even look like on May 1, let alone beyond that date. I am back to the approach to life that I have used in past dark times- take it one day at a time.
Dark Times indeed are coming. If we are really lucky this thing doesn’t mutate before we get a vaccine. That’s 18 months minimum of uncertainty and pain. Nothing will likely be over in may besides potentially the first wave.
They have been working on a HIV vaccine since the mid 80’s…what’s to say there will be one for this virus?
I give full props to the fiscal and monetary powers that be. They have installed/enacted very impressive and meaningful policy. But their work will only make things less bad on the whole. The idea that 20 million jobs list is the max is frankly laughable and woefully out of touch with what is happening. I was thinking that the PPP program would undo some of the immediate job losses as it was designed to do, but today we had numerous large employers announce significant layoffs offs and my small business sphere (possibly only anecdotal) is also not (for various reasons, some of which are logically dubious) bringing their people back on. Sadly, some small business owners are not smart enough to understand how to use the plan for what it was intended. A lot of small business owners are trump supporters, so that should be all the context needed to understand their capacity to process information. I expect tomorrow’s jobs reports to be worse than whispered and next weeks jobless claims to be at least 3 million. I don’t expect initial claims below 1 million for any given week until at least June. Add to that lenders not having felt the stress yet… there is still a lot of pain to come in risk assets. Cash and treasuries are the only place to be right now.