Jobless Claims Go Parabolic
10 million. That's the number of Americans that have applied for unemployment benefits over the last two weeks.
Following last week's record 3.3 million initial jobless claims, that number doubled this week as 6.6 million initial jobless claims were filed, according to the U.S. Department of Labor.
The last two weeks have shattered the previous initial jobless claims record. Prior to the coronavirus outbreak, the record for initial jobless claims was 695,000 in October 1982, followed by 655,000 in March 2008.
With most of the country now shut down as a result of COVID-19, the jobs data is a stark reminder of just how bad the coronavirus is affecting the U.S. economy.
For the week ending March 28, the states with the most initial jobless claims were California, Pennsylvania, New York, Michigan and Texas.
"Today’s jobs report underscores the historic devastation that is happening in America’s labor market," said Josh Lipsky, director of global business and economics policy at the Atlantic Council. "To put it bluntly, the U.S. economy went from full speed to full stop, and millions of workers were not wearing seat belts."
The Department of Labor even had a disclaimer about the coronavirus at the top of its news release.
"The COVID-19 virus continues to impact the number of initial claims. Nearly every state providing comments cited the COVID-19 virus. States continued to identify increases related to the services industries broadly, again led by accommodation and food services. However, state comments indicated a wider impact across industries. Many states continued to cite the health care and social assistance, and manufacturing industries, while an increasing number of states identified the retail and wholesale trade and construction industries."
On deck today is the March non-farm payrolls report, which will likely show the first decline in non-farm payrolls since September 2010, ending a streak of 113 months of job gains. January and February's reports showed 273,000 jobs added each month, with the unemployment rate sitting at a 50-year low of 3.5%.
However bad today's non-farm payrolls report is, it won't illustrate just how bad the jobs market actually is. The survey was conducted in the second week of March, before much of the country shut down and layoffs began.
With initial jobless claims shattering previous records and no end in sight for the shutdown that has crippled the U.S. economy, layoffs and the unemployment rate are surely to continue to increase in the coming months.
Is it enough? Amazon, which has seen its employees strike over work conditions during the coronavirus, will provide face masks and begin taking employee's temperatures. The move is geared towards employees of U.S. and European warehouses, as well as Whole Foods, and will roll out by next week. Amazon will also use machine-learning software to monitor surveillance videos to make sure employees are staying far enough away from each other.
Does it include Mickey Mouse? The Walt Disney Company is the latest to announce it will furlough employees. Disney will furlough non-union employees beginning April 19, with the company continuing to offer them full health-care benefits. Disney declined to say how many of the 177,000 employees in its Disney Parks, Experiences and Products segment will be affected. "However, with no clear indication of when we can restart our businesses, we’re forced to make the difficult decision to take the next step and furlough employees whose jobs aren’t necessary at this time," Disney said.
Voluntary then forced? Boeing is offering employees voluntary layoffs and early retirement in a move to cut costs. Those who volunteer will receive a pay and retirement package. "It’s important we start adjusting to our new reality now," Boeing CEO Dave Calhoun said. "We want to address it through natural turnover and voluntary employment actions to the extent we responsibly can. To that end, we are initiating a voluntary layoff (VLO) plan that allows eligible employees who want to exit the company to do so with a pay and benefits package. This move aims to reduce the need for other workforce actions."
They made up numbers. Shares of Chinese coffee company Luckin Coffee plunged more than 80% yesterday after an internal investigation found the company's COO falsified 2019 sales by more than $300 million. The COO and the employees involved who reported to him have been suspended by the company. Ironically, Muddy Waters Research described Luckin Coffee as a fraud in January, to which the company said was "misleading" and "false."
Altria faces more Juul troubles. The U.S. Federal Trade Commission is suing Altria to undo its $12.8 billion investment for a 35% stake in Juul, alleging the companies illegally stifled competition. "Altria and Juul turned from competitors to collaborators by eliminating competition and sharing in Juul’s profits," FTC Bureau of Competition director Ian Conner said. Altria's general counsel Murray Garnick said the company will "vigorously defend" its investment in Juul. "We believe that our investment in Juul does not harm competition and that the FTC misunderstood the facts," Garnick said.