{"id":1751,"date":"2020-06-04T11:15:44","date_gmt":"2020-06-04T15:15:44","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1751"},"modified":"2020-06-04T11:15:44","modified_gmt":"2020-06-04T15:15:44","slug":"jobless-claims-april-trade-deficit-and-may-layoff-announcements","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1751","title":{"rendered":"Jobless Claims, April Trade Deficit and May Layoff Announcements"},"content":{"rendered":"\n

KEY DATA:<\/strong>  Claims: 1.88 million (down 249,000); Benefit\nRecipients: +649,000\/ Deficit: $49.4 billion (Up $7.1 bil.); Exports: -20.5%;\nImports: -13.7%\/ Layoffs: 671,129<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cThe reopening of the economy is reducing the\nunemployment rolls in fits and starts as layoffs remain extraordinarily high.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  Tomorrow may be the big day when it comes to\nthe jobs numbers, but today\u2019s claims report provides some texture to the data.  Initial claims for unemployment insurance\nmoderated once again, but anything over half-million is extremely high and over\na million is unthinkable.  To put the\nnearly 1.9 million numbers in perspective, during the same week last year,\nclaims were 220,000<\/em><\/strong>.  Last weeks\nnumbers were simply ugly and imply that firms and governments continue to cut their\nworkforces at a rapid pace.<\/em><\/strong>  In\nMay, over nine million people filed for unemployment.  But the economy is reopening and the impact\nof people being called back to work should be seen in the continuing claims, or\ntotal recipients numbers.  They had been\ncoming down, but rose in the latest report.<\/em><\/strong>  It should be kept in mind that the recipient\nnumbers are a week lagged, so look for the total to drop sharply next\nweek.  <\/p>\n\n\n\n

The trade deficit surged in April as exports\ncollapsed more than imports tanked.<\/em><\/strong>  The economy\nshut down in April and that included trade. \nThe level of exports was the lowest since November 2009.  On the import side, the level was the lowest\nsince November 2010.<\/em><\/strong>  The only import\ncategory that posted a rise was industrial supplies and that was due to a\nmassive influx of nonmonetary gold.  I\nguess everyone took the cash from the stocks they sold and bought jewelry from\ndomestic fabricators (really, I have no idea). \nImports of vehicles were down 52%. \nOf course, vehicle exports were off 66%.  That sector collapsed and we see it in the\ntrade numbers. Trade with China has also collapsed, but that means the trade deficit\nis narrowing dramatically.<\/em><\/strong>  So\nfar this year, it is off 28.5%.  The real\nor price-adjusted goods deficit began the second quarter over eight percent\nwider and with the economy reopening, it looks like trade will be a major drag\non growth going forward.  <\/p>\n\n\n\n

Challenger, Gray and Christmas reported that May layoff announcements hit the second highest level since the report began in January 1993.\u00a0 The highest was, not surprisingly, in April.<\/em><\/strong>\u00a0 The key point is that firms are still cutting workers like crazy and while the May unemployment rate could be the peak, the decline could be slower than many expect.<\/em><\/strong> That just may be the case through the summer as the slow reopening will likely lead to firms deciding to either downsize or upsize more slowly until the true growth potential of the economy becomes clearer.\u00a0 <\/p>\n\n\n\n

IMPLICATIONS:Progress is being made on the labor front as the economy reopens. Though the pace has been disappointing, we should see things accelerate as we move through June.\u00a0 That should limit the damage in the second quarter GDP report.<\/em><\/strong>\u00a0 In the latest Blue Chip Financial report (of which I am a panel member), second quarter growth estimates range form -17.6% to -49.2%.\u00a0 The consensus is -34%, while I am at -22%.\u00a0 All of those are historic numbers, but the wide range shows how reopening is creating confusion in the forecasting ranks.\u00a0 But the real issue is not so much the decline in the second quarter, but the recovery in the third and fourth quarters.\u00a0 That will depend upon the pace in cutting the unemployment rate.\u00a0 The Blue Chip Economic report will be released in a few days (we are just now filling that out now), and it will be interesting to see where the panel comes out on the fourth quarter unemployment rate.\u00a0 I have it still around 10% and if that is the case, it will be tough to post two consecutive quarters of really strong growth even given the low level of activity from which we start.\u00a0 Tomorrow, the May employment report should provide the depth of the hole we are in.\u00a0 It is likely to be quite deep.<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  Claims: 1.88 million (down 249,000); Benefit Recipients: +649,000\/ Deficit: $49.4 billion (Up $7.1 bil.); Exports: -20.5%; Imports: -13.7%\/ Layoffs: 671,129 IN A NUTSHELL:  \u201cThe reopening of the economy is reducing the unemployment rolls in fits and starts as layoffs remain extraordinarily high.\u201d WHAT IT MEANS:  Tomorrow may be the big day when it … Continue reading Jobless Claims, April Trade Deficit and May Layoff Announcements<\/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":[3],"tags":[],"class_list":["post-1751","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1751","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=1751"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1751\/revisions"}],"predecessor-version":[{"id":1752,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1751\/revisions\/1752"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1751"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1751"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1751"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}