Too much news today. But let me start.
Today the Labor Department reported that new claims for unemployment through regular state programs rose to 1.42 million in the week ended July 18. That was a 109,000 increase from the prior week and the first increase in the weekly total since March. Economists surveyed by Bloomberg had predicted an increase of 1.3 million new claims.
The increase left economists and Wall Street scurrying to figure out the reason for the uptick and the implications for the economy going forward. The mot benign explanation is that the increase is a temporary reaction to the coming end of coronavirus support programs such as the Paycheck Protection Program as companies cut trim their workforce in anticipation. Nobody actually believes that, in my opinion. The more likely explanation and a real worry on Wall Street is that we’re seeing the edge of a new wave of job losses as economies shut down again in states at the forefront of the current surge in coronavirus cases and deaths. The negative outlier is that we’re seeing signs of the kind of decline in demand and consumer purchasing that often causes a recession. And that many business, especially small businesses, have run through their first lines of credit.
“At this stage, you’re seeing all the wrong elements for recovery,” Gregory Daco, the chief United States economist at Oxford Economics told Bloomberg. “A deteriorating health situation, a weakening labor market and a softening path for demand.”
Looking ahead, the week reflected in this report is the week that will be used by the Department of Labor to calculate the June jobs data and the unemployment rate for the month.
