30.3 Million – The number of jobless claims made in the United States since the start of the Coronavirus Pandemic. It’s an astounding number, primarily when charted on a graph that shows weekly jobless reports since 1967.
The question arises – is the jarring rise in filings for unemployment consistent around the world?
United States’ jobless claims represent 18.41% of their labour force. This is on the back a total of 1.03 million confirmed Coronavirus cases or just under 33% of the confirmed cases in the world.
Relative to other countries, the US has had a muted and weak reaction towards the Coronavirus. Cases continue to pick up, with New York being the epicenter of the pandemic. The rhetoric out the Whitehouse has been of optimism for the future, as their deaths top 60,000. Jared Kushner, President Donald Trump’s senior adviser, touted the administration’s response to the Coronavirus as a “great success story.”
The Senate approved an unprecedented $2 Trillion Stimulus package, giving Americans and additional $1,200 to assist households as lockdowns continue.
Germany’s jobless, “Kurzarbeit” (short-time work subsidy) claims currently represent only 1.08% of their labour force. However, Hubertus Heil, the country’s labor minister, stated that there would be “many more” workers taking from the Kurzarbeit wage subsidies. Over 1.4m people received the funds during the peak of the global financial crisis of 2009.
Germany’s response to the Coronavirus has been strong. The extensive testing capacity of over 900,000 a week for a population of 83 million, strong leadership, and a robust public healthcare system all combine to a marvelous attempt in combatting the virus. Out of the 162k infected with the Coronavirus, around 6,500 have died, giving a fatality rate of just under 4%. This is in comparison with the United States fatality rate of 5.8%.
The Germany Government approved an $810B Stimulus package primarily to help all businesses maintain liquidity and keep employment throughout Germany. Alongside the short time work subsidy, Germany’s attempt to bolster the strength of business contrasts with the United States’ method of directly giving cash infusions to households.
The United Kingdom’s universal credit claims represent a 2.08% of the labour force. The scheme helps individuals are low on income or out of work.
The UK has been hit with criticism with their reaction to the Coronavirus, with Prime Minister Boris Johnson stating that he “shook hands with everybody” at a hospital including coronavirus patients. This was three weeks before he caught the Coronavirus. This casual attitude has skeptics wondering whether the government was doing enough to combat the virus and whether it is too little, too late with over 26.7k deaths representing a 15.8% mortality rate, the highest in the world.
The UK Government approved a $424b Stimulus package to help with household mortgages, airlines, retailers, and the hospitality industry.
Canada’s jobless claims reached 2.13 million, or 11% of their labour force.
Canada has shut down borders to who is not a citizen, a permanent resident, or a US citizen; however, the country is not in lockdown. Canada’s Prime Minister, Justin Trudeau, urged citizens to impose self-quarantine. This is on the back of 3,180 deaths, or just under a 6% fatality rate. As Canadian territories slowly loosen restrictions, it will be seen whether their relatively flexible reaction towards the Coronavirus will balance economic recovery and the safety of the population.
The government has pledged over $1.1T in support of Coronavirus related costs, half of which represents support to municipal governments for small businesses and households.
Officially, the number of unemployed citizens only represents 6.2% of the labour force (the labour force includes 290m migrant workers). However, an estimation by Liu Chenjie, chief economist at Upright Asset, stated that including migrant workers, the Coronavirus might have pushed 205 million workers into “frictional unemployment,” or 24.45% of the labour force.
Being ground zero for the Coronavirus, China implemented the first and strictest lockdown in Wuhan. With a population of 11 million, residents of Wuhan were the first to experience the suspension of public transport and roads, with stores that sell food and medicine remaining open. Fifty-nine days after the initial lockdown, Chinese authorities slowly lifted the lockdown but urged citizens to practice self-isolation when need be. China’s official numbers stand at 84,373 confirmed cases, with 4,643 deaths, representing a fatality rate of 5.5%.
There has been plenty of criticism regarding China’s response to the Coronavirus. From not allowing foreign scientists access in the country and access to essential data, the silencing, and death of Dr. Li Wenliang, the doctor who first spoke out about the Coronavirus to the world alongside skepticism with their official coronavirus figures. But as the first country to be hit with the effects of the Coronavirus, they are also the first country to emerge from the height of it. Krish Sankar, a Senior Research Analyst at Cowen, states that Apple’s supply chains in China are 90% operational, giving a sense of movement and productivity in the country.
China’s central bank, the Peoples Bank of China, has injected over $220B into the money markets to support liquidity and lending. However, the Chinese government has not issued any direct fiscal stimulus, unlike their western counterparts over concerns of inflation and increasing an already all-time high budget deficit.
It will be a while till we get a solid look at the toll the Coronavirus has had on the world. However, reliable data on the economic and societal damage of the Coronavirus may come to light in the next couple of months, possibly giving us a better prediction of how the world will move forward with regards to this devastating pandemic. With nations slowly creeping out of lockdown with cautious optimism, we may soon experience a seismic shift in how we go on with our daily lives. However, as the past has told us, we will emerge out of this crisis victorious.
Anish Lal, an Senior Analyst at Blackbull markets gives a technical overview on the historic SP500 gains closing a tumultuous month on the back of the US's historical unemployment claims number. Watch the video here:
This week’s jobless claims more than doubled last weeks’ record high, reaching 6.648 million. Last week’s figure of 3.28 million jobless claims was already 5 times larger than the previous record of 700,000. And now it has doubled this new figure again.
Economists have taken this as a sign that the government stimulus packages are already too late, with more than 10 million Americans having lost their jobs in this month already. Considering the US Labor Force is currently at 164 million, a 10 million combined figure of unemployment claims in the previous 2 weeks would put 6% of the American population without jobs. Added onto that the figure of 3.5% existing unemployment, and this could mean that close to 10% of the entire country is unemployed.
These figures are overwhelmingly in recession territory. Even during the global recession of 2008-2009, the number of jobless claims per week only reached 665,000 at its highest. Unfortunately even with the stimulus packages and rate cuts, businesses are laying off their employees en masse, especially in the hospitality and retail sectors, as those have been the hardest hit.
Conversely, oil posted its biggest one day gain yet, of 24.67%, after US President Donald Trump made a statement on Twitter that he had spoken to the Saudi Arabia Crown Prince Mohammed bin Salman, after previously promising to speak to Russian President Vladimir Putin, regarding the ongoing price war between the two countries. Trump stated that he expected the two countries to cut back on their oil production by 10, to possibly even 15 million barrels.
Immediately after the tweet was made, WTI crude jumped in price from $21.91 to $25.89, almost approaching $26 per barrel. However once the initial excitement faded, it once again fell back down, dropping below $24 at its low. This was most likely due to the fact that investors realised that even with a supply reduction, the demand isn’t high enough to drive prices back up. Of course, some were also doubting the validity of Trump’s tweets, questioning whether or not such a major agreement between the 3 largest oil producers in the world could even come to fruition.
The VIX volatility index has also decreased since the middle of the previous month, dropping from a record 82 points down to 50 now. Also known as the “Fear Index”, the VIX is a measurement of the level of expected volatility in the markets for the next 30 days, and is derived from the movement of the S&P 500. Initially moving below 20 points and holding steady, the VIX understandably surged following the global coronavirus pandemic, rising all the way to 82 points as the virus worsened across the world and economies ground to a halt. Despite unprecedented measures taken by Reserve Banks and governments around the world, such as the US Federal Reserve cutting the interest rate for the Dollar by 100 basis points, effectively dropping it 0%, as well as a $2 trillion economic stimulus package approved by the US Senate, volatility across all markets seemed to show no signs of wearing off. However, despite the drop in the VIX, a 50 point volatility forecast still represents a daily price change of around 3.4% for the S&P 500, which then translates to a +/-15% over the period of the month.
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