Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
With the Covid-19 downturn in full swing, unemployment is spiking in America and Europe. Across factories, offices, shops, pubs and restaurants, people are being ‘furloughed’ where possible or simply laid off.
Today we learn how many Americans filed jobless benefits claims last week, and experts fears it will smash the previous week’s record levels.
Economists predict that today’s initial jobless claims figure will hit 3.5 million — a new record, up from the 3.3 million reported a week ago.
The previous record was below 700,000 people, so the sudden shutdown of America’s economy is quite unprecedented.
Elsa Lignos of Royal Bank of Canada predicts that four million Americans filed unemployment claims last week — and that the previous week’s record could be revised higher too!
Last week’s print of just under 3.5 million is ripe for a dramatic upward revision. In particular, our US economists point out that despite California having reportedly seen one million claims through that week (according to the governor), less than 200k showed up in the number.
For this week, we are looking for another sizeable 4 million increase.
Joblessness is accelerating sharply in the UK too. Last night, the government revealed that nearly a million people applied for Universal Credit last week – an astonishing surge, showing how badly families across the country have been hit.
The global Covid-19 case total is now approaching one million, putting a very serious strain on health systems worldwide (one major UK hospital nearly ran out of oxygen last week, we report).
Medical experts insist that lockdowns, physical distancing and social isolation are the only way to beat the virus. That is going to mean a serious hit to economic growth (although letting coronavirus run riot, overwhelming the system, would hardly be better!).
Shares fell sharply in Europe and America yesterday, with indices down around 4%, on fears of a deep Covid-19 recession.
Stephen Innes, chief global markets strategist at AxiCorp, says hopes of a rapid recovery have faded:
With the global economy in freefall, markets have gone back to risk-off mode overnight as investors are struggling to look through President Trump’s ominous forecast suggesting Americans could keep dying into June.
Now the markets dispute to come up with some alphabet letters to analogize a potential economic recovery. Still, it’s going to be anything but a “V” shape recovery. That’s for sure.
- 1.30pm BST: US weekly jobless data
- 3pm BST: US durable goods orders for February