Newsletter: More Layoffs, Fewer Startups, Less Deodorant

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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.

Good morning. Jeff Sparshott here with the latest on the labor market, meat supplies, fiscal policy, purchasing managers and consumer behavior during a pandemic.

Labor-Market Decline

About 4.4 million Americans sought unemployment benefits last week. The latest data confirm a historic labor-market decline, bringing the total claims for the past five weeks to more than 26 million. If there is one silver lining, the rapid pace of layoffs appeared to be easing. Jobless claims had reached nearly seven million at the end of March. But some economists expect a fresh surge of claims in future weeks as workers who were previously unable to file because of backlogged state systems are counted, and as states begin to accept applications from people who are newly eligible under a $2 trillion stimulus package, such as independent contractors and self-employed individuals, Sarah Chaney and Gwynn Guilford report.

Case study: Rhode Island experienced a sharp increase in claims when it began accepting applications included in the expanded unemployment assistance, offering a glimpse at the potential impact of the stimulus bill on claims.


U.S. durable goods orders for March are expected to fall 12.0% from the prior month. (8:30 a.m. ET)

The University of Michigan’s consumer sentiment index for April is expected to fall to 67.0 from an earlier reading of 71.0. (10 a.m. ET)

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

Note: This is a partial list of events and subject to change.


Startup Scene

The number of people losing their jobs and the number of businesses lowering their gates as a result of the coronavirus crisis is beyond stunning. Less visible are many of the things that aren’t getting off the ground—the new corner cafes and dentists offices, and the businesses that start small and grow into household names. An off-the-radar report from the Census Bureau helps show what’s missing. Last week, there were 56,550 applications filed to start a new business, down 20% from a year earlier. For businesses with planned wages—ones that are looking to hire workers beyond their proprietor—the fall was even sharper. These missing startups could cast a pall over the economy long after the threat from the pandemic recedes, Justin Lahart writes.

C’mon Meat

U.S. grocers are struggling to secure meat, looking for new suppliers and selling different cuts, as the coronavirus pandemic cuts into domestic production and raises fears of shortages. Covid-19 outbreaks among employees have closed about a dozen U.S. meatpacking facilities this month. Others have slowed production. Grocery executives at retailers including Walmart and Costco worry supplies of some products could run short just as demand is surging, Jacob Bunge, Sarah Nassauer and Jaewon Kang report.

Fiscal Response

House lawmakers approved the next infusion of aid for small businesses and hospitals. The $484 billion bill replenishes two depleted small business-relief programs, offers additional assistance to hospitals and funds an expansion of testing capacity nationwide. 

Lawmakers now turn to the next round of economic relief. But Democrats, Republicans and the Trump administration have sharp policy differences over what should be in the package—and whether it is needed at all.

Most Americans have received their stimulus money but millions are still waiting as an understaffed IRS contends with electronic payments bouncing back and taxpayers griping about difficulties using the agency’s website.

The Trump administration has compared the pandemic to a war, so it seems fitting it is overseeing levels of borrowing last seen in World War II. The Committee for a Responsible Federal Budget predicts the federal debt will hit 106% of GDP in 2022, matching the record set in 1946. That’s starting to worry some in Washington. The usual fear is that high government debt leads to a crisis or excessive inflation. But there’s little risk of the first, and nothing inevitable about the second, Greg Ip writes.

European leaders began debating Thursday a crisis-recovery fund that will likely total at least a trillion euros. However, major differences remain over the scale, funding and focus of initiatives needed to lift Europe from its economic crisis. Borrowing costs rose for Italy and Spain as a result of fears that Germany and the bloc’s other wealthy countries won’t sufficiently help harder-hit states avoid a surge in debt, Laurence Norman and Anna Isaac report.

This Is Bad

Business activity in the U.S., Europe and Japan collapsed in April as governments tightened restrictions aimed at limiting the spread of the coronavirus. Across the board, IHS Markit’s surveys of purchasing managers fell to record lows, underscoring the severity of a global economic contraction.

Behavioral Economics

China’s supply chain for medical goods is devolving into a free-for-all. Chinese factories are being inundated with offers for ventilators, masks and other protective gear, and are flexing their leverage, dictating buying conditions and demanding advance payments in full. Desperate buyers often have no other option, Liza Lin and Eva Xiao report.

British retail sales fell in March at the steepest pace on record, as efforts to contain the new coronavirus shuttered most of the U.K.’s stores.

Consumers are cooking more and shampooing less. The question now is which coronavirus-induced behaviors will stick and which will fade when restrictions to fight the pandemic are lifted, Saabira Chaudhuri and Sharon Terlep report.

  • Unilever said people are using personal-care products such as shampoo and deodorant less, estimating 11 fewer uses in a typical week. On the flip side, people are cooking more at home, buoying demand for brands such as Knorr soup cubes, Hellmann’s mayonnaise and Pot Noodle instant noodles.



Back to business isn’t back to normal. “While daily routines [in Wuhan, China] have largely resumed, there remain significant restrictions on a huge range of activities, from funerals to hosting visitors at home. Bolstered by China’s powerful surveillance state, even the simplest interactions are mediated by a vast infrastructure of public and private monitoring intended to ensure that no infection goes undetected for more than a few hours,” Sharon Chen and Matthew Campbell write in Bloomberg Businessweek.


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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