Connect with us

Economy

36 Million Have Sought US Unemployment Aid Since COVID-19 Hit

Avatar

Published

on

36 million have sought US unemployment aid since COVID-19 hit

WASHINGTON: Nearly 3 million laid-off workers applied for US unemployment benefits last week as the viral outbreak led more companies to slash jobs even though most states have begun to let some businesses reopen under certain restrictions.

The wave of layoffs has heightened concerns that more government aid is needed to sustain the economy through the deep recession caused by the viral outbreak.

Republicans in Congress are locked in a standoff with Democrats, who have proposed trillions more in aid, including for struggling states and localities, beyond the nearly $3 trillion already given to individuals and businesses.

Republican leaders say they want to first see how previous aid affects the economy and have expressed skepticism about approving much more spending now.

Roughly 36 million people have now filed for jobless aid in the two months since the coronavirus first forced millions of businesses to close their doors and shrink their workforces, the Labor Department said Thursday.

An additional 842,000 people applied for aid last week through a separate federal program set up for the self-employed and gig workers.

ALSO READ | The sound of silence: An Indian muses on life in a New York ravaged by COVID-19

All told, the figures point to a job market gripped by its worst crisis in decades and an economy that is sinking into a severe downturn. The report suggests the tentative reopening of some businesses in many states has done little to reverse the flow of mass layoffs. Last week’s pace of new applications for aid is four times the record high that prevailed before the coronavirus struck hard in March.

Jobless workers in some states are still reporting difficulty applying for or receiving benefits. These include free-lance, gig and self-employed workers, who became newly eligible for jobless aid this year.

In Georgia, one of the first states to partially reopen its economy, the number of unemployment claims rose last week to 241,000. In Florida, which has allowed restaurants to reopen at one-quarter capacity, claims jumped to nearly 222,000, though that state’s unemployment agency has struggled to process claims. Other states that have lifted some restrictions, such as South Carolina and Texas, reported large declines in claims.

President Donald Trump appeared to respond to the report by tweeting, “Good numbers coming out of States that are opening. America is getting its life back!”

The latest jobless claims follow a devastating jobs report last week. The government said the unemployment rate soared to 14.7% in April, the highest rate since the Great Depression, and employers shed a stunning 20.5 million jobs. A decade’s worth of job growth was wiped out in a single month.

ALSO SEE:

Even those figures failed to capture the full scale of the damage. The government said many workers in April were counted as employed but absent from work but should have been counted as temporarily unemployed.

Millions of other laid-off workers didn’t look for a new job in April, likely discouraged by their prospects in a mostly shuttered economy, and weren’t included, either. If all those people had been counted as unemployed, the jobless rate would have reached nearly 24%.

Most economists have forecast that the official unemployment rate could hit 18% or higher in May before potentially declining by summer.

The job market’s collapse has occurred with dizzying speed. As recently as February, the unemployment rate was 3.5%, a half-century low. Employers had added jobs for a record 9½ years. Even in March, unemployment was just 4.4%.

Now, with few Americans shopping, traveling, eating out or otherwise spending normally, economists are projecting that the gross domestic product — the broadest gauge of economic activity — is shrinking in the April-June quarter at a roughly 40% annual rate. That would be the deepest quarterly contraction on record.

The states that are now easing lockdowns are doing so in varied ways. Ohio has permitted warehouses, most offices, factories, and construction companies to reopen, but restaurants and bars remain closed for indoor sit-down service.

A handful of states have gone further, including Georgia, which has opened barber shops, bowling alleys, tattoo parlors and gyms. South Carolina has reopened beach hotels, and Texas has reopened shopping malls.

Data from private firms suggest that some previously laid-off workers have started to return to small businesses in those states, though the number of applications for unemployment benefits remains high.

Few analysts expect a quick rebound. Federal Reserve Chair Jerome Powell warned Wednesday that the virus-induced recession could turn into a prolonged downturn that would erode workers’ skills and employment connections while bankrupting many small businesses. Powell urged Congress and the White House to consider additional spending and tax measures to help small businesses and households avoid bankruptcy.

Powell spoke a day after House Speaker Nancy Pelosi, a California Democrat, proposed a $3 trillion aid package that would direct money to state and local governments, households and health-care workers.

Trump is applauding the moves to reopen states’ economies in hopes of reducing unemployment. So far, there is limited evidence on how that is working.

Homebase, a software company that provides time-clock technology to small businesses, has tracked how many employees have clocked in and for how many hours since the pandemic struck. Though Homebase’s data suggests that some people have returned to work in states that have partially reopened, it’s unclear how sustainable that trend can be unless many more customers return. All states remain far below their pre-virus employment levels.

In Georgia, which began reopening in late April, the number of people working at small businesses on Tuesday was down 37% compared with the beginning of March, according to Homebase’s data. That is an improvement from mid-April, when the number of employees working had fallen by half.

In New York, which remains mostly shut down, employment at small businesses is down 63% as of Tuesday, only slightly better than in mid-April.

(c) 2020, Express Network Pvt Ltd. All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

Aircraft

As Airlines Suffer, American Most Likely To File Bankruptcy

Avatar

Published

on

As Airlines Suffer, American Most Likely To File Bankruptcy

A few weeks ago, Boeing CEO Dave Calhoun startled the airline sector when he said a major airline would go bankrupt by Halloween.

“I don’t want to get too predictive on that subject. But yes, most likely,” Calhoun said. “Something will happen when September comes around.”

Airline stocks plunged as investors and analysts scrambled to determine which airline became most vulnerable.

RapidRatings, a risk assessment firm, recently completed a comprehensive stress test on the major U.S. airlines. They used dozens of variables including debt loads, cash flow analysis, and a loss of at least 15% of revenue.

American Airlines To Suffer The Most?

We may never know which airline that Calhoun was alluding to. Although, RapidRatings’ analysis says that American Airlines is the most likely to go bankrupt in the coming months.

The company also looked at Delta, United and Southwest, but none of them are in such dire circumstances as American.

In an interview with Yahoo Finance, RapidRatings CEO James Gellert said, “American is the most at risk and that’s it in every way you look at it. American stands out as the weakest of this cohort.”

The stress tests run by RapidRatings produce both a short term financial health rating (FHR) and long term core health score (CHS). According to RapidRatings, the FHR measures a company’s short-term resiliency and default risk. Meanwhile the CHS analyzes risk and company efficiency over a three year period. A score lower than 40 means a company is at risk of failing.

Gellert says the analysis has more than a decade of proven results. Also, “over 90% of companies that failed have been rated 40 and below on our scales.”

The stress tests found that American was the weakest U.S. airline going into the recent pandemic. It has a financial health rating of 59 and core health score of 66.

As the pandemic unfolded and air travel plunged 90%, American’s FHR score plunged to 29. Meanwhile, its CHS score fell to 27.
Gellert added that “I would be quite certain that is the airline in the crosshairs of the Boeing comment.”

The Future Of American

American, in response to the sub-40 stress test scores, said in a statement that it was “focused on rightsizing the airline for the current environment, and plan to reduce our 2020 operating and capital expenditures by more than $12 billion.”

Analysts, however, are starting to smell blood in the water. Cowen equity research analyst Helane Becker recently told Yahoo Finance, “American’s liquidity position is dependent on government aid, bucking the trends we’ve seen from other airlines. The company is receiving a total of $10.6 billion … [and] we expect another capital raise” in the 3rd quarter.”

Savanthi Syth, an equity analyst at Raymond James, also agrees American will need more capital to weather the storm. “I mean, if you look at the cash on hand that’s definitely the case,” Syth said. American has six months of cash on hand, United has 10 months, Delta has 12, and Southwest has almost 19 months, according to Raymond James.

Syth added, “I don’t think bankruptcy is a foregone conclusion… it’s just going to take longer for American to kind of dig themselves out of this kind of debt burden, and therefore equity could be challenged in the near term.”

Up Next:

 

Continue Reading

Business

Sorry AOC, Billionaires Haven’t Made $434B During Pandemic

Avatar

Published

on

Sorry AOC, Billionaires Haven’t Made $434B During Pandemic

Nation’s Billionaire’s See Net Worth Jump $434B in First Two Months of Pandemic

It was an eye-opening headline, and fairly drew the frustrations of a lot of us. This is especially true for the 38+ million Americans who have lost their jobs since the coronavirus pandemic shut down. Our country has been at it a little more than two months ago.

How dare they get richer while we suffer?

Chuck Collins, director of the Institute for Policy Studies Program on Inequality, the co-author of the report, expressed his piece. He said, “The surge in billionaire wealth during a global pandemic underscores the grotesque nature of unequal sacrifice.”

Meanwhile, Frank Clemente, the executive director of Americans for Tax Fairness which co-authored the study, also shared his opinion. He said, “The pandemic has revealed the deadly consequences of America’s yawning wealth gap, and billionaires are the glaring symbol of that economic inequality.”

Democrat Alexandria Ocasio-Cortez didn’t want to miss the opportunity to inject her brand of socialism into the public discourse. “Really great system we got here. Can’t imagine why anyone would question how beneficial or sustainable it is for the working class,” she tweeted. This is in response to CNBC running the headline.

The Study’s Flaws

The top five US billionaires explicitly mentioned in the article are all Democrats. These include Warren Buffett, Bill Gates, Jeff Bezos, Mark Zuckerberg, and Larry Ellison. But setting that irony aside, the problem is that the article is simply dishonest, points out MarketWatch columnist Steve Goldstein.

“The study… examines billionaires’ wealth between March 18 — the rough start date of the pandemic shutdown, when most federal and state economic restrictions were in place — and May 19. It relied on the Forbes’ billionaire list, which itself is built around stock-market performance.”

The flaw, as Goldstein points out, is that the beginning and end dates used for the study are incorrect.

“Think about that in the market context. The pandemic did not start March 18 (nor, of course, had it ended on May 19), and certainly market concerns about the pandemic did not start March 18. Far from it.”

He says that to see a true picture of how much money the billionaires made – or lost – during the pandemic, they need to expand the date range.

“A more logical way to think about whether billionaires got richer, or not, is to think about the performance from the Feb. 19 peak in the market, after which more investors began to get concerned by the novel virus. You then get to see who got richer even in the face of the crippling economic blow.”

If you use this revised date range, Goldstein says the truth is that billionaires have actually lost money since the market peaked and the pandemic began

“Cumulatively, the top 50 billionaires lost $232 billion between the market’s peak and this Tuesday. If the remaining billionaires on the Forbes list lost wealth at the same roughly 12.5% rate that the top 50 experienced, that’s another $200 billion–plus wiped out.”

So while it’s easy to run a headline that bashes billionaires, the truth lies somewhere in the middle.

Up Next:

Continue Reading

Economy

Battle for 3000: Bulls and Bears Ready for “Dogfight”

Avatar

Published

on

Battle for 3000: Bulls and Bears Ready for “Dogfight”

After climbing 33% since the late-March lows, the S&P 500 index closed at 2955 on Friday, putting the psychologically important 3000 level within reach.

In addition to the psychological importance of the 3000 level, that also happens to be where a key long-term technical indicator sits that is widely used to determine if we are in a bull or bear market.

The two most commonly used indicators are the 50-day and 200-day moving average. The 50-day is used by investors as a gauge of the short-term market trend, while the 200-day moving average indicates the long-term market trend.

“The fact that the S&P 500 is coming off a 35% rally and that this 200-day moving average lines up with a nice even 3,000 number seemingly makes this area especially important,” said Renaissance Macro Research analyst Kevin Dempter in a note on Friday. “A breakout is not likely to come easily and we expect a dogfight here around the 200-day.”

For 21-straight trading sessions, the S&P 500 index has bounced between the 50-day and 200-day moving averages. Jason Goepfert, head of SentimenTrader and founder of independent investment research firm Sundial Capital Research, stocks are “trapped between time frames.”

While bulls anticipate the S&P breaking above 3000 – and simultaneously the 200-day moving average – will signify a new bull market and push stocks to record highs, history indicates that may not be the case.

Dempter says that since 1928, there have been 29 instances where the market traded between the 50-day and 200-day moving average for at least 20 days. In 21 of those 29 instances, the S&P 500 ended up falling below the 50-day average, while only eight ended with a push above the 200-day, he noted, making for a roughly 72% probability the index will break down.

Mark Arbeter, president of Arbeter Investments, said in a note to clients last week that as we approach the key 200-day indicator, “One would think that after a big correction or bear market, and then a retaking of this key average, the bulls would go wild, the bears would capitulate, and the stock market would go into outer space.”

He points back to previous times the S&P tried to climb above the 200-day, and says it won’t be easy.

“When the S&P first cleared the 200-day in June 2009 as we were coming out of that major bear market and the financial crises, the index stalled and then pulled back about 7%, riding on the top of the declining 200-day for about a month. The index retook the 200-day in June 2010, after a swift decline, paused, and then fell to new corrective lows.

The 200-day was overtaken in August 2010, and rolled over again. After the major correction in 2011, the “500” rose back above the 200-day for 2 days and then fell 9.8%. We saw similar price action in 2015 and 2016 as the late rally over the 200-day in October 2015 failed miserably.”

Continue Reading
Advertisement

Facebook

Trending

Copyright © 2019 The Capitalist. his copyrighted material may not be republished without express permission. The information presented here is for general educational purposes only. MATERIAL CONNECTION DISCLOSURE: You should assume that this website has an affiliate relationship and/or another material connection to the persons or businesses mentioned in or linked to from this page and may receive commissions from purchases you make on subsequent web sites. You should not rely solely on information contained in this email to evaluate the product or service being endorsed. Always exercise due diligence before purchasing any product or service. This website contains advertisements.