This will mark the fourth week since this often-overlooked piece of real-time job data first made a splash and alerted everyone to the catastrophetaking place in the U.S. labor market.
Wall Street economists expect that just under 5.5 million Americans filed for unemployment insurance for the first time during the week ending April 11. This would bring the total number of initial claims to over 20 million in just four weeks.
Morgan Stanley economist Jan Kozak said in a note Wednesday that, “While we believe the magnitude of increases in claims have moved passed the peak, the cumulative number is still rising, likely reaching the range of 25 million over the next few weeks.”
And so if initial jobless claims will start to moderate over the coming weeks, it is the rest of the economic data picture that is only just starting to get really, really ugly.
As seen on Wednesday.
Some economic data, while continuing to be bad, may have peaked.
Retail sales in March fell by the most on record, dropping 8.7% from the prior month and capturing a decline in activity that only took hold halfway through the month. And March’s retail sales figures were actually flattered by a surge at grocery stores — where sales rose 26.9% in March — and some online retailers and consumers stockpiled ahead of expected shelter-in-place orders across the country.
As analysts at Bespoke Investment Group said Wednesday, “The scope of the dislocations in the March retail sales report is really unlike anything you ever see in economic data.”
Michael Pearce, senior U.S. economist at Capital Economics, said: “With widespread lockdowns only beginning around the middle of the March, and the panic buying phase of the crisis over, retail spending looks like it will fall by at least as much again in April.
“Clearly there is huge uncertainty as to how deep the downturn proves and how long restrictions remain in place, but for now we remain comfortable with our forecast for GDP growth of -40% annualized in the second quarter.”
In addition to the record drop in retail sales, investors saw shocking declines in three other economic reports.
And the latest reading on homebuilder sentiment from the National Association of Home Builders fell by the most on record to levels not seen in almost 8 years.
As MUFG economist Chris Rupkey said Wednesday, “The economy is literally in free fall.”
And the typically measured Beige Book report from the Federal Reserve released on Wednesday afternoon did little to quell fears investors may have had after the morning’s brutal round of data.
“Economic activity contracted sharply and abruptly across all regions in the United States as a result of the COVID-19 pandemic,” the report said. “All Districts reported highly uncertain outlooks among business contacts, with most expecting conditions to worsen in the next several months.”
On the labor side, employment dropped in all 12 of the Fed’s national districts. No wage pressures were reported. More companies said they expect to lay off workers. As the New York Fed said in its Beige Book report, “In general, there is great uncertainty and concern about the duration of the coronavirus pandemic and its economic effects.”
But direction economic data will take, at least for the next month, is somewhat less uncertain — the data will get worse. The only question is by how much.
8:30 a.m. ET: Housing Starts, March (1.307 million expected,1.559 million in February)
8:30 a.m. ET: Building Permits, March (1.3 million expected, 1.452 million in February)
8:30 a.m. ET: Philadelphia Fed Business Outlook, April (-30.0 expected, -12.7 in March)
8:30 a.m. ET: Initial Jobless Claims, week ended April 11 (5.462 million expected, 6.606 million prior); Continuing Claims, week ended April 4 (7.46 million prior)
BRISTOL, ENGLAND - OCTOBER 13: In this photo illustration old ￡1 coins are seen on top of a new ￡10 note on October 13, 2017 in Bristol, England. The deadline to use the old one pound coin which was introduced in 1983, is at midnight on Sunday and so from Monday 16 October, the round ￡1 coin will no longer be legal tender. Because it was easily illegally copied, lots of worthless pound coins have been in circulation, however the new coin has been described as the most secure coin in the world. (Photo illustration by Matt Cardy/Getty Images)
