Initial Claims Expectations are Unimaginable!
Joe Perry March 25, 2020 8:16 PM
The average estimate of economists surveyed is 1,500,000.
Thursday’s Initial Jobless Claims for the week ending March 21st are going to be something we have never seen before. According to Bloomberg, the average estimate of economists surveyed is 1,500,000, with a high estimate of 4,000,000 and a low estimate of 360,000. For comparison, last week’s initial claims number was only 281,000, while the prior week was 211,000.
Service businesses have been forced to close their doors until the coronavirus pandemic is under control. These include cruise ships, restaurants, bars, nightclubs, gyms, retail stores, etc. In addition, many non-essential factories were forced to temporarily shut down. As a result, many of these businesses have had to layoff workers, sending possibly millions of people to file for unemployment benefits.
To put this week’s initial jobless claims number in historical perspective, the highest number of claims ever recorded during a single week was 695,000 in October of 1982. The second highest initial jobless claims number was during the height of the Great Financial Crisis in March 2009, at 665,000. This week’s number is expected to be roughly 4 times to 6 times those amounts!
This is one of the reasons Congress is on a mission to pass a stimulus bill which would give people cash in hand immediately. Many in Congress feel this is a necessity for the plan, as opposed to a payroll tax cut. This is also one of the main reasons President Trump is battling senior heath officials on “reopening” segments of the economy as soon as possible.
Thursday’s Initial Jobless Claims will serve as the new benchmark going forward. If initial jobless claims increase from Thursday forward, it’s going to be a long Q2. However, if the claims data starts to fall after this week’s number, it may be a sign that things are starting to improve.
Next Friday is the first Non-Farm Payrolls data since the country began shutting down. One has to wonder how high the unemployment rate could reach over the next few months as the coronavirus continues to plague the world. We’ll find that out next week. As for Initial Jobless Claims, don’t be surprised to see an extreme number. Keep in mind that the market is already pricing in 1,500,000!
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.