{"id":1702,"date":"2020-04-16T11:11:19","date_gmt":"2020-04-16T15:11:19","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1702"},"modified":"2020-04-16T11:11:19","modified_gmt":"2020-04-16T15:11:19","slug":"weekly-jobless-claims-march-housing-starts-and-april-philadelphia-fed-manufacturing-survey","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1702","title":{"rendered":"Weekly Jobless Claims, March Housing Starts and April Philadelphia Fed Manufacturing Survey"},"content":{"rendered":"\n

KEY DATA:<\/strong>  Claims: 5.245 million; 4-Week Total: 22.03\nmillion\/ Starts: -22.3%; Over-Year: +1.4%; Permits: -6.8%; Over-Year: +5%\/\nPhila. Fed (Manufacturing): down 43.9 points; Orders: down 55.4 points; Future\nActivity: up 7.8 points <\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cAnother week of massive unemployment claims\nand the end is not in sight.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong> When\nyou shut down the economy, people become unemployed \u2013 duh \u2013 and the numbers we\nare seeing are unimaginable.  Over\n5 million people filed for unemployment insurance last week, bringing the total\nto over 22 million in just the last four weeks alone.<\/em><\/strong>  Let me put this into perspective.<\/em><\/strong>  During the Great Recession\u2019s peak filing\nperiod, which occurred in March 2009, \u201conly\u201d 2.64 million people filed during a\nfour-week period.<\/em><\/strong>  That is, over\neight times as many people filed for unemployment this year compared to eleven\nyears ago.  While the claims numbers should\ndecelerate,<\/em><\/strong> they could remain incredibly high for the next few weeks, <\/em><\/strong>as\nsome states have just started to put in social distancing curbs.  It is likely the total will reach 30 million\nby mid-May.  It is hard to see the\nunemployment rate peaking below 20%. \nThat would be double the top reached during the Great Recession and it\ncould probably even double the post-WWII 10.8% rate hit in November and\nDecember 1982.<\/em><\/strong><\/p>\n\n\n\n

Housing starts plummeted in March, but even that\nsharp decline may be misleading.<\/em><\/strong>  Construction\nhad been on a roll for a year and it looked like this sector would lead the\neconomy this year.  Thus, the large\ndrop in construction may look bad, but starts were still higher than they were\nin March 2019.  I suspect that if we had\nthe numbers for the last week of the month, they would show a much greater\ndecline and that is the level we need to be factoring into the outlook for the\neconomy.<\/em><\/strong>  It is unclear how far residential\nnew construction activity will fall. \nOnly a few states are limiting activity and that is often just for spec\nconstruction.  The problem may be more in\nthe multi-family area as social distancing requirements are harder to satisfy\nin large projects.<\/p>\n\n\n\n

The Philadelphia Fed\u2019s April index of manufacturing\ntanked, which was hardly a surprise.<\/em><\/strong>  There were\nsome interesting numbers in the report.  Not\none firm reported a rise in new orders<\/em><\/strong> while 71% said they\ndeclined.  But while order books thinned,\nthe decline was not excessively large and over 16% saw their backlogs\nincrease.  Despite the current carnage,\nrespondents were more optimistic about the future.  <\/em><\/strong>The index of activity six months from\nnow rose.  The easiest interpretation is\nthat respondents believe we have hit rock bottom and there is no way to go but\nup.  Let\u2019s hope they are right.    <\/em><\/strong><\/p>\n\n\n\n

IMPLICATIONS:<\/strong>  It seems investors think there is no amount\nof short-term damage to the economy that matters. <\/em><\/strong> In the three weeks from March 21st<\/sup>,\nwhen the first massive job claims number was released and we saw that claims<\/em><\/strong>,\nnot those unemployed, just those who could maneuver through the websites and\nfile unemployment claims, reached a total of 22 million,<\/em><\/strong> the\nequity markets rose by double-digits and a record weekly gain were recorded.<\/em><\/strong>  Really, did anyone factor that many\nunemployed people into equity prices?  I\ndoubt it.<\/em><\/strong>  And that total will\nonly rise a lot more.  Previously,\nthe largest number of people unemployed was 15.4 million in October 2009.  We are likely to see more than twice that\nnumber this time.<\/em><\/strong>  And even if\nthe CARES Act artificially lowers the unemployment rate by shifting\nunemployment compensation payments from direct government checks to indirect\ngovernment checks, the actual unemployment situation will not change.  Those private sector-government paid workers\neventually have to actually work and businesses will have to make enough money\nto pay them. Over thirty million is a large number to find real work when the\nreopening is going to be phased in.  But\nhey, the relationship of Wall Street to Main has been tenuous for a long time\nso I guess we can chalk this up to \u2026 well I have no idea what.   <\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  Claims: 5.245 million; 4-Week Total: 22.03 million\/ Starts: -22.3%; Over-Year: +1.4%; Permits: -6.8%; Over-Year: +5%\/ Phila. Fed (Manufacturing): down 43.9 points; Orders: down 55.4 points; Future Activity: up 7.8 points IN A NUTSHELL:  \u201cAnother week of massive unemployment claims and the end is not in sight.\u201d WHAT IT MEANS: When you shut down … Continue reading Weekly Jobless Claims, March Housing Starts and April Philadelphia Fed Manufacturing Survey<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1702","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1702","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1702"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1702\/revisions"}],"predecessor-version":[{"id":1703,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1702\/revisions\/1703"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1702"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1702"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1702"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}