Good News?? Initial Claims Only 4.4 Million
Joe Perry April 23, 2020 10:35 AM
The longer the US economy remains “closed” the more people who will need to apply for unemployment benefits.
Initial Claims released earlier today showed that 4,427,000 Americans filed for initial jobless claims for the week ending April 18th vs an expectation of 4,200,000 and 5,237,000 last. There have now been over 25,000,000 Americans apply for Initial Jobless claims over the last 5 weeks!
Before the coronavirus lock down began, initial jobless claims remained relatively stable between 200,000 and 300,000. A “big miss” was considered a 30,000 difference between expectations and actual! Having said that, is this initial claim reading of 4.4 million considered “Good” news? Looking at the data over the last few weeks, the 4.4 million who applied for jobless claims has been the lowest since the March 29th reading, as many states did not impose the Stay at Home mandate until April. The good news is that the number of new initial jobless claims are trending lower. The bad news is that the number is still extremely high! There have been talks of “re-opening” the economy on a state by state basis, however that will be done in phases. As people begin to go back to work, the net number of people filing for claims should go lower.
Source: Trading Economics
To help ensure that initial claims will continue to decrease, Congress is expected to vote today on a new spending bill worth roughly $485 billion that will help small businesses under the Payroll Protection Program (PPP). This program was recently depleted of the $349 billion initially granted for the program. It allows for certain businesses of less than 500 employees some loan forgiveness, as well as new loans for line items such expenses, including payroll. In addition, President Trump signed an executive order yesterday to temporarily suspend immigration into the United States and “ensure that unemployed Americans of all backgrounds will be first in line for jobs as our economy reopens.” There is a long list of exemptions, however the goal is to keep Americans at work and off employment.
With the economy hopefully “reopening” soon, the new funds in the PPP and the President’s immigration executive order, traders would hope that the 6,867,000 people that filed for the week of March 29th will be the highest ever! The longer the US economy remains “closed” and the longer the it takes to get the coronavirus under control, the more who people will need to apply for unemployment benefits.
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