Sara Gilmore hands a purchase order to Don O'Donoghue at her hair salon in New York. Many small ... [+]
There’s something missing in the data showing 30.3 million Americans lost their jobs because of forced government closures of private business in a global pandemic — it’s the wage cuts, bonus losses and one other thing people aren’t yet able to calculate: the tens of thousands of local summer jobs that aren’t happening this season.
The Newport Jazz and Folk Music Festivals, huge tourist attractions for Newport, Rhode Island, which survives on summer traffic, has been canceled.
The Newport Music Festival, a month long summer event held in the seaside mansions of Newport and Bristol, RI, has been canceled.
Assuming baseball might not happen this year, no New York Yankees is hundreds of summer jobs lost for people who did that for work every summer.
Thousands of summer beach houses whose owners rent them to cover mortgage payments, and make some big money, may be cut in half. That’s not only less tax revenue for beach towns like the Jersey Shore and Cape Cod, it’s a foreclosure boom.
Maybe they will all find something else. Maybe they will not.
Maybe they will move.
A woman holds a no job sign during a rally near the General Assembly in North Carolina on April 28. ... [+]
Numerous college students who had to flee campuses nationwide in late February and early March are no longer in their college towns and not coming back anytime soon. Businesses that relied on those college students sticking around for the summer months have lost staff, and a customer base.
“This week’s economic data leads us to believe that markets have not even begun to feel the full force of the pandemic’s impact. The depressed commercial activity, reduced consumer spending and wider layoffs we’re seeing now are going to hit corporate earnings hard over the next couple of quarters. It seems very unlikely that the government bailouts will be able to keep pace with – or offset – the freefall,” says Randy Swan, founder and lead fund manager at Swan Global Investments.
There is some good news here.
Initial jobless claims fell to a little over 3.8 million in the week ending April 25, the fourth consecutive weekly decline following the peak of 6.9 million on March 28.
Claims were down in 41 of 53 jurisdictions last month, led by declines in California.
Although claims in last week's range remain extraordinarily high from a historical perspective, this week's estimate is a positive sign that job losses are slowing. Prior to the pandemic, initial unemployment claims had never risen more than 700,000 in any week since 1967, the first time such data was recorded.
Barclays deputy chief U.S. economist Jonathan Millar said he expects the number of weekly unemployment claims to fall in the coming weeks.
“It’s fair to say that the pace of declines is falling somewhat short of our expectations,” he admits.
A number of states have taken steps in recent days toward a phased re-opening of the economy. With states opening up somewhat earlier than thought, it is quite possible that the pace of decline in initial claims will slow even more in the coming weeks as people get back to work.
“The worst hits to (economic) activity is likely behind us,” says Richard Lacaille, global CIO for State Street Global Advisors. He thinks the second half of 2020 brings a “gradual healing” to the U.S. economy and 2021 is the real hum-dinger, meaning whoever is president in 2021 can claim success, even if they had nothing to do with it.
Meanwhile, for markets, the Fed and Treasury are ready to protect portfolios, as Main Street is still waiting for their one-time $1,200 stimulus check, and small business owners and sole proprietors are waiting for a response to their payroll protection program application. What they are doing for money in the meantime is anybody’s guess, but one look at food pantries suggests they need help.
“The Fed is still focused on how to keep the United States from falling into a massive recession,” says George Boyan, president of Leumi Investment Services. “We are already heading for a recession. Just how severe it will be remains to be seen.”
Barclays has the U.S. economy contracting by around 6.5% this year and rising by around 4.4% in 2021, not enough to make up for this year’s loss.
