By: Spencer Israel
If the U.S. economy was a movie, then Thursday gave us our first teaser trailer.
And it was bad.
By now, you know the number. A record 3.28 million Americans filed for unemployment benefits during the week of March 20, a 1,100% increase from the previous week. And that is just the start.
According to Dow Jones, the consensus estimate for this week’s Initial Jobless Claims reading is 2.65 million. There’s also a strong case to be made that last week’s number isn’t close to being accurate.
Those figures, mind-blowing as they may be, are only the beginning of what will be a parade of coronavirus-induced economic bombshells in the coming weeks. Though they are only reaffirming what seems obvious to say—that the U.S. economy is headed for, if not already in, a recession—the record-setting nature of these numbers are going to be hard to stomach, nonetheless.
Here are just a few of the upcoming economic events to watch:
The monthly reading of consumer confidence is expected to come in around 110, which would be the lowest reading since December 2016.
The monthly survey of manufacturing executives on everything from new orders to production is expected to fall below the barometer of 50, indicating a slowdown in manufacturing.
According to Edmunds, U.S. auto sales will have fallen 35% in March on a year-over-year basis. TrueCar is projecting a 42% YOY drop. Either way, it’s going to be bad, with some estimates for new car sales as low as 12 million, which would be the lowest reading since 2011.
The number of people who filed for unemployment benefits last week is expected to be 2.65 million.
The most-watched economic data point will only partially reflect the harsh realities of the past few weeks. Either way, nonfarm payrolls are expected to decline by 56,000 per Dow Jones, and the unemployment rate is expected to rise to 3.9%. Should those numbers hold, it would be the first decline in jobs since September and 2010, and the highest unemployment rate since January 2019.
Beyond This Week
Looking further ahead, Monthly Retail Sales on April 15, Durable Goods on April 24, and GDP on April 29 will all confirm provide key indications of just how bad the economic damage of COVID-19 is.
The Market’s Reaction
There is a sliver of good news, however, at least in terms of the market.
As Thursday’s rally shows, these numbers will not be a surprise. The market’s steep decline in March was its way of doing what it does best: pricing in future expectations. Clearly, expectations are already quite low.
There is also still the belief out there that this is a short-term problem. St. Louis Fed President James Bullard expressed his view last week that the economy will bounce back strongly once the virus stops spreading.
The numbers coming in over the next few weeks will set new historical precedents. But they won’t be a surprise.
And as bad as they will be, they will all reflect the two most important figures in the world right now: confirmed cases and deaths. The sooner those numbers stop growing, the sooner things everything else goes back to normal.
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