Coronavirus Hits US Data: Jobless Claims Jump by 31.5%

The impact of the Coronavirus is already being felt in the US stock markets, but from today, we can also see it in the economic data.

The weekly jobless claims figures jumped to 281K from 211K in the prior week, and 214K in January. Seen from January, this week’s number is 31.5 percent higher, and just by looking at the time series below it is clear that we could have seen a trend shift, and that initial jobless claims might climb higher in the weeks ahead.

According to the US Department of Labor, several states cited that the layoffs are Covid-19 related and that services-related industries, accommodation, and food services were leading in layoffs.

However, if compare the recent rise with historical levels, then the rise to the region of about 300K is the typical amount of layoffs as we saw in the “good” times of 2005 to 2007 before the Great Recession of 2008-2009.

Yet, I suspect we will see more pain in the weeks ahead, as the US is seeing massive increases in new coronavirus cases. In the last seven days we have seen an increase of 742%, at a daily rate of 33.13%. If this growth rate extends for another week, then the US will have almost 26,000 confirmed cases, which would be higher than the current figures of Iran, which is the third most affected country. Only Italy at 35.7K cases and China at circa 81K cases has currently more than 26K cases.

The US is however making some efforts to contain the spread, yet the restrictions are not as stringent as they were in China or Europe, and that could extend the time until they get the spread under control.

 

Initial Jobless Claims

 

Article written by Alejandro Zambrano, Chief Market Strategist at ATFX UK.

 

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