• Initial unemployment claims expected to be 3.5 million.
  • Filings would be 50% lower than the March 27 peak.
  • Total of 30 million people have been furloughed in six weeks.
  • Most layoffs were expected to be temporary at the time.

The number of American filing for unemployment benefits is expected to decline for the fourth week in a row but the improvement is relative, as the number will still be more than five times greater than any period prior to last month.

Initial jobless claims are projected to be 3.5 million in the week of April 24 bringing the total from March 20 to 29.953 million.

Reuters

Continuing claims for the six month benefits period is also to forecast to rise by the same amount to 19.476 million.

Reuters

Claims will have dropped 50% in a month from their peak in the second week of the massive layoffs caused by government mandated business closures in the effort to halt the Corona virus pandemic.  These unemployment claims, including this week, represent 18.2% of the American labor force of 164.6 million people.

During the financial crisis of a decade ago the largest one week filing was 665,000 on March 28, 2009. The highest total for continuing claims was 6.635 million on May 30, 2009.

Labor market prognosis

The most pressing question for the labor market and the overall economy is how many of these workers will return to their jobs as states begin to lift restrictions on businesses.

In statistics from several states that require employers to state whether the layoff is considered temporary or permanent, the vast majority were thought to be temporary when they occurred. California firms with at least 75 workers said just 7% were considered permanent and of the 23,400 layoffs in Colorado and Washington at the time of the report 75% were considered temporary.  

The expectation of most employers and workers that unemployment would be short-lived was based on hope rather than knowledge.  In this unique situation the ability of the millions of small businesses that employed most of the furloughed works to reopen is unknown.

Most owners will strive to rebuild but for restaurants, bars and other social venues, customers may return too slowly to rescue these cash-flow dependent businesses.   

US GDP

While everyone who has been laid-off can qualify for federal insurance and many will have additional state benefits, the shock to demand of the layoffs and social restrictions has pushed the US economy into contraction in the first quarter.  

Growth was estimated at a 2.7% annualized pace in first quarter in January and February by the Atlanta Federal Reserve GDPNow model.  The  Bureau of Economic Analysis reported -4.8% GDP in its advanced estimate for the complete first quarter, the first of three releases. A rate of -4% had been predicted by economists inthe Reuters survey, with a range of 1% to -15%.

With more than two dozen states planning to at least partially lift business and social restrictions in the next week businesses will soon know if there are enough customers to keep them in from going under.

If these experiments are successful public pressure in the remaining locked-down states will likely force their opening as well.

How many businesses will have survived their near death experience and be able to bring back their employees is unknown. There are no economic models for such an event.

Conclusion: Markets and the dollar

Though the impact of the economic shutdown in the first quarter is limited to March the information will inform how markets will assess the fully involved second quarter.

The greater the decline in January, February and March the more negative will become the outlook for April, May and June.  Equities and bonds will respond in a straight forward fashion with higher prices, and for bonds lower yields if the number is no worse than expected and the safety premium will continue to leach from the dollar.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD remains pressured below 0.6800 after Chinese data dump

AUD/USD remains pressured below 0.6800 after Chinese data dump

AUD/USD is holding losses below 0.6800 after China's GDP missed estimates with 4.7% YoY in Q2 2024. Mixed activity data from China and a broad US Dollar rebound add to the weight on the pair, as risk sentiment stays tepid following the weekend's Trump attack. 

AUD/USD News

EUR/USD stays weak below 1.0900 as US political violence boosts US Dollar

EUR/USD stays weak below 1.0900 as US political violence boosts US Dollar

EUR/USD is on the defensive below 1.0900 in the Asian session on Monday. The pair edges lower amid risk aversion on the Trump rally shooting, which has put a bid under the US Dollar. The focus remains on US politics and Fedspeak looking ahead, 

EUR/USD News

Gold price remains depressed amid modest USD strength, holds above $2,400 mark

Gold price remains depressed amid modest USD strength, holds above $2,400 mark

Gold price struggles to capitalize on Friday's goodish rebound from the $2,391 area and kicks off the new week on a weaker note. This marks the second straight day of a downtick and is sponsored by a modest US Dollar strength, which tends to undermine demand for the USD-denominated commodity.

Gold News

Shiba Inu erases losses from past week, eyes 18% gains

Shiba Inu erases losses from past week, eyes 18% gains

Shiba Inu traders are anticipating the roll-out of futures contracts, products like Exchange Traded Funds that could boost the asset’s utility. An IBC report shows the contract is expected to be listed post Monday, July 15.

Read more

Trump Assassination Attempt: Gold, stocks set to decline on Republican sweep speculation Premium

Trump Assassination Attempt: Gold, stocks set to decline on Republican sweep speculation

Fist in the air and on with the fight that has been the historic picture that former President Donald Trump shortly after he survived an assassination attempt on his life. Trump was injured in his ear but seems to have come out stronger politically from the shocking political violence. 

Read more

Majors

Cryptocurrencies

Signatures