All the layoffs by businesses affected by the coronavirus outbreak are starting to show up in the latest unemployment figures. The newest report from the U.S. Department of Labor shows that for the week ending March 14, new jobless claims jumped 70,000 compared to the previous week and totaled 281,000 – the highest amount since September 2017.
“During the week ending March 14, the increase in initial claims are clearly attributable to impacts from the COVID-19 virus,” the Department of Labor said in a statement. “A number of states specifically cited COVID-19 related layoffs, while many states reported increased layoffs in service related industries broadly and in the accommodation and food services industries specifically, as well as in the transportation and warehousing industry, whether COVID-19 was identified directly or not.”
The numbers are likely to get much, much worse in the coming weeks as layoffs pile up while businesses undergo either a voluntary or mandatory shutdown.
While it’s not likely that we will see as many as 32 million unemployed Americans that Treasury Secretary Steve Mnuchin is warning about, experts do believe we could see as many as 1 million jobless claims a week very soon.
Ian Shepherdson, the chief economist for Pantheon Macroeconomics, wrote in a note yesterday that jobless claims could ““spike by several hundred thousand” and eventually “breach a million” the way things are headed.
In California, unemployment claims jumped 34% compared to last week and the state’s governor said this past Tuesday alone they had 80,000 new unemployment claims.
“We average about 2,000 unemployment insurance claims a day,” Newsom said. “Two days ago or three days, we saw about 40,000 applications. After that 70,000 applications. Yesterday, 80,000 unemployment applications.”
Stocks Show Modest Gains
The stock market showed modest gains yesterday, giving investors a brief respite from the carnage of the last 10 trading days.
After opening the day trading lower following the jobless claims report, the Dow Jones Industrial Average closed 188 points higher to gain 0.95%. The S&P closed 0.47% higher and the Nasdaq jumped 2.3% higher, lead by gains in tech stocks.
Oil had a good day, as WTI crude saw its biggest one day jump ever, climbing 24.4% higher. It closed at $25.34.barrel after the Wall Street Journal reported that the US has volunteered to mediate a discussion between Saudi Arabia and Russia over oil production.
Boeing (NYSE: BA), still battling the 737 Max debacle, announced it is looking into cutting its dividend and laying off workers as it tries to survive what looks to be mounting financial pressures amid the slowdown in air travel and the grounding of its 737 Max planes.
Finally, credit-ratings agency Moody’s is doing a global review of its ratings to better reflect the impacts the coronavirus and low oil prices are having on companies. The first round of downgrades or warnings are expected very soon and could really impact the credit ratings of oil and gas companies.