U.S.: The lay-offs keep coming - ING

James Knightley, the Chief International Economist at ING, notes that U.S. weekly jobless claims are not falling as quickly as they should in an environment of businesses re-opening, suggesting significant ongoing economic stress. 

"Initial jobless claims have come in at 1.48 million for the week of 20 June versus the consensus forecast of 1.32mn and a reading 1.508mn from the previous week. It is the 14th consecutive week of claims above 1 million with today’s figure still more than double the worst number recorded during the global financial crisis (665,000 on 27 March 2009)."

"Continuing claims data fell to 19.5mn for the week of 13 June from 20.3mn. This was better than expected, but we would caution that it is rather choppy and could move higher once again next week."

"Moreover, the total number of people claiming benefits in all programmes for the week ending 6 June was 30,553,817, an increase of 1,294,309 from the previous week."

"This means more than 20% of the workforce were claiming benefits in the first week of the month, well above the 13.3% “official” unemployment rate published by the Bureau for Labour Statistics."

"With the number of Covid-19 cases clearly on the rise in many states we also have to be alive to the risk of containment measures being reinstated, which would add to economic stress and the risk of further lay-offs – consumer could of course vote with their feet if virus fears are not brought under control. Then with the US$600 boost to weekly unemployment benefits scheduled an end on 31 July, we may be about to enter an uncertain period for household incomes and, by extension, consumer spending. The pressure will undoubtedly build for additional fiscal support in the next few weeks, otherwise forecasts for the 2H20 rebound may well need to be scaled back."