Weekly new jobless claims were reported this morning, and to no one’s surprise they rose to levels thought unimaginable just a few weeks ago. As shown in the LPL Chart of the Day, 3.3 million people filed new claims for unemployment benefits in the week ending March 21, almost 5 times the previous high of 695,000 set in 1982.
“The personal and economic disruptions represented by the latest new claims number are staggering,” said LPL Chief Investment Officer Burt White. “This is a genuine human crisis, and a robust response from the Federal Reserve and Congress seems appropriate. Unfortunately, we do expect more numbers like this in the coming months. At the same time, markets are forward looking and will be more focused on how quickly we might be able to get to the other side.” Per LPL’s Chart of the Day:
While the number of new claims is extraordinary, it’s not entirely unexpected. The United States and countries across the globe have shut down entire segments of their economies in an effort to delay or disrupt the impact of the COVID-19 pandemic. Many of the jobs most impacted by social-distancing measures, such as cashiers, restaurant workers, and hotel staff, are in the services sector, which now makes up about 80% of the jobs in the United States.
There is no silver lining in a number like this, but there is reason for hope. The US economy was not in a recession prior to the global spread of COVID-19. Workers are not being let go because of some structural fault in the economy or a financial crisis. As a result, when the slowdown ends, we may not see the extended hiring delay that has typically followed recessions. In fact, a surge in demand may require extra hiring, although it may not take place until people are fully confident that social distancing is no longer necessary.
Markets may not be responding to the dramatic numbers seen this morning, but they have been absorbing the rapidly changing economic expectations it represents over the last few weeks. We’ll see a lot of this over the next couple of months: historic numbers with markets seemingly unmoved. But it’s not because they’re indifferent. Economic data is slow moving and backward looking, while our economic reality has been changing at an unprecedented pace. Even new unemployment claims, which are released weekly, seem somewhat stale. Markets will still be reacting to shifting expectations of the depth and duration of the slowdown, as well as the effectiveness of policies to help businesses and workers get to the other side.
Recently, you may have seen reports that a record-low number of homes are available for sale—roughly 1.03 million nationwide. If you compare that to the average number of homes for sale during the past 10 years, it’s no surprise that many hopeful homebuyers are having issues securing a home. But why exactly is the housing … Continue reading “Forces Driving the Housing Market”
It can be exhausting trying to keep up with the whims of Wall Street. Lately, the financial markets have been fixated on federal taxes and what may be proposed on Capitol Hill in the weeks and months ahead. Wall Street’s focus on taxes closely follows its attention on the 10-year Treasury yield. And it wasn’t … Continue reading “The Whims of Wall Street”
President Joe Biden introduced the much-anticipated American Jobs Plan, which outlines an approach to spend roughly $2.2 trillion on the nation’s infrastructure and other projects. As part of the legislative process, the Biden administration also laid out a proposal for paying for the domestic investment. The plan includes raising the corporate tax rate to 28% … Continue reading “Paying for the Infrastructure Bill”
Financially, many of us associate the spring with taxes – but we should also associate December with important IRA deadlines. This year, like 2020, will see a few changes and distinctions. December 31, 2021, is the deadline to take your Required Minimum Distribution (RMD) from certain individual retirement accounts.
There’s an old Wall Street maxim that says, “markets climb a wall of worry.” And these days, there’s plenty to worry about with the trend in long-term interest rates and bonds.
Epic Capital provides the following comprehensive financial planning and investment management services: Learn More >