Jobless claims spike, and more grim economic data
Updated: Mar 31, 2020
The Labor Department released data on Thursday that showed a 30% increase in unemployment claims last week, one of the largest spikes on record. The data is just one of many recent reports showing the impact of the novel coronavirus on the U.S. economy.
Politicians in Washington have been debating and passing legislation in an effort to remedy the economic fallout caused by the coronavirus. President Trump signed a "phase 2" spending bill into law on Wednesday that would provide subsidies for virus testing and paid sick leave for workers who test positive for the virus or who are taking care of a family member who is infected.
Following the surge in unemployment claims, Goldman Sachs predicted that jobless claims could spike to a record 2.25 million this week, following the sharp increase from last week.
"Many US states have reported unprecedented surges in jobless claims this week," David Choi, a Goldman Sachs economist, said in a research note. Their research also said that "even the most conservative assumptions suggest that initial jobless claims are likely to total over 1 million" this week.
The Goldman economists based their prediction on a sharp increase in unemployment claims in 30 states at the start of this week. New York State's Department of Labor had 16 times its usual call volume, and California Governor Gavin Newsom told reporters that in his state, they received 80,000 applications in a single day--significantly more than their 2,000 per day average.
Other economic reports match the expectation of a worsening economy, and Americans are realizing how grim the economic situation is. Bloomberg's Consumer Comfort gauge, a measure of consumer confidence, plummeted 11 points in March to the lowest level since October 2008 during the midst of the financial crisis. The March decline followed a sharp increase that occurred in February's reading.
The New York Federal Reserve's Empire State Manufacturing Survey, a measure of business activity in New York State, fell 34 points to the lowest level since 2009. Optimism about the six-month outlook in the survey fell sharply and also fell to 2009 levels.
According to the survey, businesses said that the biggest negative effect that the coronavirus is having on them is that availability of materials and inputs has decreased, making it more difficult to conduct business. 52% of business leaders surveyed said that the virus has had a "significant downward effect" or a "slight downward effect" on their bottom line.