Newsletter: Lost Jobs, Falling Exports

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This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

It’s jobs day. We’ll have a special edition of the newsletter after the U.S. employment report is out. In the meantime, Jeff Sparshott here with a preview of key numbers and the latest on the economy.

Labor Lost

The U.S. unemployment rate likely soared to a new post-World War II high in May, though there are signs the labor market is slowly mending from the coronavirus pandemic and related shutdowns. The Labor Department is set to release its monthly snapshot of employment at 8:30 a.m. ET. Economists project millions of additional jobs were cut last month, on top of the 21.4 million jobs shed in March and April. Job loss on such a scale is unprecedented in the postwar era. The jobless rate was 3.5% in February and surged to 14.7% in April, the highest on records dating from 1948. Unemployment may have approached 20% or more in May, Josh Mitchell reports.

Many businesses in big cities had reopened or were set to reopen only to be looted or forced to board up during the protests. That could delay their reopening by days or weeks and cause another round of job losses. Even so, there are signs of a gradual return to work—though not nearly enough to reverse damage from the past few months.


U.S. nonfarm payrolls for May are expected to fall by 8.33 million from the prior month and the unemployment rate is expected to rise to 19.5% from 14.7%. (8:30 a.m. ET)

The Baker Hughes rig count is out at 1 p.m. ET.

U.S. consumer credit for April is out at 3 p.m. ET.


When Better Is Still Really Bad

The number of workers applying for and receiving unemployment benefits was historically high but eased at the end of May, indicating the U.S. labor market has weathered the worst of the economic fallout from the coronavirus pandemic. The ranks of Americans drawing on unemployment benefits ticked up to 21.5 million in the week ended May 23, though the pace of increase significantly slowed from earlier in the crisis. So-called continuing claims are released with a one-week lag and appeared to hit a peak in early May, Sarah Chaney reports.

Americans are collecting an additional $600 per week in unemployment benefits on top of their regular weekly payment, a perk for workers that is set to expire in July without new legislation. Democrats want to extend the funding, but Republicans are concerned the supplemental payments disincentivize a return to work. The Congressional Budget Office estimated that extending the expanded jobless benefits through January 2021 would mean five in every six claimants would make more money from unemployment insurance than from work. That decreases the number of people who would otherwise be working in the second half of this year and all of next year. The policy would help boost spending in the short-term but not in the long-term, according to CBO. —Sarah Chaney

Trade Trouble

U.S. exports and imports both posted their largest monthly decreases on record in April. Shipments of aircraft and cars have dropped as manufacturers such as Boeing Co. were hit by the world-wide disruption of travel and auto makers closed factories to prevent the spread of the virus. Global trade flows may start to pick up again as some factories reopen and the easing of social-distancing measures revives consumer demand, Harriet Torry reports.

Progress fulfilling a phase-one trade deal with China, meanwhile, appears limited. Beijing committed to increasing purchases of U.S. goods and services by $200 billion over 2017 levels under the pact. Tracking by the Peterson Institute For International Economics‘ Chad Bown shows China’s purchases of products covered under the agreement were at less than half year-to-date targets.

Printing Press

The European Central Bank scaled up its bond-buying program to €1.35 trillion ($1.52 trillion) in a bold move that puts the ECB’s stimulus effort in line with that of the Federal Reserve. Investors cheered the ECB’s decision, pushing the euro to its highest level against the dollar since March and fanning a recent rally in eurozone equity and bond markets. The move eases pressure on the region’s embattled governments and underscores a recent shift in Europe, where policy makers initially lagged behind the U.S. in the amount of firepower they threw at the crisis but have over the past week unveiled a series of bold stimulus moves, Tom Fairless reports.

Closing Down, Opening Up

Corporate bankruptcies spiked during May as the coronavirus pandemic slammed the U.S. economy, pushing the number of filings to levels recorded in the wake of the 2007-09 recession.

American Airlines joined other carriers in restoring some flying that was curtailed due to the coronavirus pandemic. American’s schedule will still be significantly smaller than most summers—the airline said it would operate 55% of last year’s domestic schedule in July. In April and May, American’s domestic schedule was 20% of last year’s levels, Alison Sider reports.

Las Vegas is reopening. After shutting down in mid-March in response to the novel coronavirus outbreak, casinos are now trying to bring tourists back together while keeping them apart. The glitzy casinos reopening their doors is the latest example of the hospitality industry trying to figure out how to deliver its services amid social distancing. The changes: sinks between slot machines, temperature screenings, socially distanced slot players and face masks amid the blackjack tables, Katherine Sayre reports.


How does the post-Covid-19 U.S. labor market stack up against other countries? “The United States experienced the largest January-to-April rise in unemployment and along with Canada lost over 15% of employment, amounting to 25 million newly jobless U.S. individuals. Germany, Japan, South Korea, Australia, and Israel lost only 0.7%-4.4% of employment–equivalent to 18-24 million fewer jobless individuals on America’s population base.  … [J]ob losses have been lowest in countries that either contained the virus early or had robust systems for subsidizing jobs at reduced hours,”  Schmidt Futures’ Martha Gimbel and UC Berkeley’s Jesse Rothstein and Danny Yagan write in a new paper.


Real Time Economics has launched a downloadable calendar with concise previews forecasts and analysis of major U.S. data releases. To add to your calendar please click here.


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