Filings for unemployment claims in the US, announced on 9 April, saw a weekly increase of 6.6 million, again towards the upper end of most estimates. That adds to the 3.2 million in the final week of March and 6.7 million in the first week of April, to give an eye-wateringly ridiculous number of 16.5 million people over the last three weeks now out of work. This continuing slump in employment due to coronavirus is unprecedented – the level of filings point to an unemployment rate north of 14%. How much of this is permanent as opposed to temporary is very difficult to model – some companies will likely rehire once the pandemic recedes but how many companies can continue to exist in this suspended animation? Some will collapse and the rehiring bounce back will then be slower and longer.
Markets are not concentrating on these depressing numbers as the figures are, in a sense, a given already. The more interesting news to markets was an accompanying announcement from the Federal Reserve that it will step into the funding markets providing loans to municipals and smaller companies to the tune of USD 2.3 trillion in a bid to support the economy.