What’s Going On Here?Workin’ nine to five, what a way more than three million Americans used to make a livin’: data out on Thursday showed the most ever filed for unemployment benefits last week. What Does This Mean?The 3.28 million Americans who filed for unemployment wasn’t just a massive jump from last week’s two-and-a-half-year high: it also eclipsed economists’ forecasts and made the previous record of 695,000 – set during the Great Depression – look like small potatoes (tweet this).
While the speed and magnitude of job losses might’ve come as a surprise, the overall rise in unemployment didn’t. Coronavirus has led to the closure of hotels, gyms, and restaurants, and the latter alone – as America’s second-largest private employer – boasts a 16 million-strong workforce. With an estimated fifth of the US workforce currently on lockdown, rising unemployment’s an unavoidable consequence. Why Should I Care?The bigger picture: Up-to-data.
A lot of economic data is backward-looking, which means the economic situation will already have changed by the time analysts get a handle on it. But jobless claims reports are different in that they rapidly reflect current economic conditions. Investors are keenly aware of that too, which might be why stocks initially rose after Thursday’s report: a bigger-than-expected drop in employment now could mean we’re closer to the trough – and therefore to an eventual economic recovery.
For you personally: The “b” is silent.
Several governments have stepped up to cushion coronavirus’s impact on workers. The British government, for example, is paying 80% of salaries, while the US is sending cash to every man, woman, and child. That’s necessary partly because the average Brit has less than one month’s salary set aside for emergencies, and 20% of Americans don’t save anything at all. In a crisis, then, lots of people invariably turn to short-term debt like credit cards. Which is fine – just as long as you’re not racking up interest payments. | 