Unfortunately, the bad economic news just keeps coming. It’s tempting to just ignore it, but I think that would be unwise. I feel my clients and readers want my take on the news of the day, whether it’s good or bad news, so that is what I will continue to do.
The Labor Department reported this morning that another 4.43 million Americans filed for new unemployment benefits in the latest week. While that number is lower than last week’s 5.2 million and the all-time weekly high of 6.9 million in late March, it means that over 26 million workers have lost their jobs in the previous five weeks.
I keep making this point because its staggering: In the last five weeks, we’ve lost far more jobs than all those created since the Great Recession ended in early 2009.
And it’s going to continue. The flood of claims will likely continue to mount as cash-strapped local governments lay off workers, businesses struggle to make payroll amid stay-at-home mandates and “gig” economy workers apply for relief they were not eligible for previously.
Another economic indicator I always watch closely is Gallup’s Economic Confidence Index. This Index plunged from +22 in March to -32 as of last Friday. That’s the largest monthly decrease (54 points) in this closely-watched Index in the nearly three decades since Gallup has tracked it.
Just two months ago, February, this Gallup Index was at the highest level in 20 years. Yet now Americans’ evaluations of the economy’s current health are suddenly more negative than positive. Specifically, 74% of US adults said the economy is getting worse
With more than 26 million Americans suddenly unemployed because of the coronavirus crisis, only 22% of Americans say it is a good time to find a quality job. This is down from 68% in the prior reading from January, which was only slightly off the trend’s high point of 71% in May of last year.
Morgan Stanley predicts the US unemployment rate will top 15% by the end of April (next week). It expects the rate to climb to near 16.5% in May, marking the highest level since the Great Depression. And the bank warns that the rate will continue to rise throughout the summer months.
New Small Business & Hospital Stimulus Expected Today
I mentioned this in passing in my Forecasts & Trends letter last Tuesday, but it bears mentioning in more detail today. A survey this month by the National Federation of Independent Businesses (NFIB) found that only 20% of small businesses had received money from the federal government’s Paycheck Protection Program as of last Friday, April 17.
Yes, plenty more small businesses have been approved for these loans, but the vast majority have not gotten any money yet. This is precisely what I have been warning about! The wheels of government move slowly, and apparently with the banks as well, even in a crisis such as this.
As I reported last week, millions of small businesses do not have enough cash reserves to survive beyond the end of this month. And the end of this month is just one week away! I again warn that millions of small businesses may never reopen their doors.
Hopefully, the latest stimulus package that was approved yesterday by the Senate will be passed by the House today. The Senate rescue package was almost $500 billion. Hopefully, this round of PPP loans will go smoother and more quickly than the first round. There is already talk in Washington about yet a new fifth round of stimulus targeted at state and local governments. Nobody knows where this bailout will end. That’s scary
On a different note, I just want to say how thankful I am for all of you who read my work! It really means a LOT to me. I am especially grateful for your comments and suggestions, whether you agree with me or not – all feedback is welcomed. And in case you’re wondering, I read every response we receive. It helps me be a better writer, so please keep it up.
I sincerely hope you and yours are doing well during this crisis. We are all doing well at Halbert Wealth Management. Most of us are coming into the office pretty much as usual. A few employees are working from home but are continuing to function at 100% in taking care of our clients.
Finally, we are very interested to see how Texas Governor Greg Abbott’s plan to reopen the state’s economy starting this weekend and next week goes. Like most other Americans, Texans are anxious to go back to work, but it remains to be seen if it’s too soon. I don’t think so, assuming we do it right. I’ll keep you posted.
Sorry, comments are closed for this post.