Economist: ‘The economy has fallen into the abyss’ – Yahoo Money

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The coronavirus outbreak, or COVID-19, has pushed the U.S. economy to break yet another record, with 6.648 million people applying for unemployment claims for the week ending March 28.” data-reactid=”16″>The coronavirus outbreak, or COVID-19, has pushed the U.S. economy to break yet another record, with 6.648 million people applying for unemployment claims for the week ending March 28.

This number is a sign of the times to come, one economist wrote.

“Net, net, job layoffs are soaring faster than any time in recorded history,” Chris Rupkey, MUFG managing director and chief financial economist, wrote in a note on Thursday morning. “This looks bad and it is bad. The worst jobless claims in U.S. history means the economy has fallen into the abyss. Stay tuned. Story developing.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The unemployment numbers for the week ending March 21 had already been shocking enough, where 3.307 million&nbsp;claims were filed. This week’s claims doubled that.&nbsp;And prior to the coronavirus-induced economic shock, the previous record was 695,000 claims filed the week that ended October 2, 1982.&nbsp;” data-reactid=”19″>The unemployment numbers for the week ending March 21 had already been shocking enough, where 3.307 million claims were filed. This week’s claims doubled that. And prior to the coronavirus-induced economic shock, the previous record was 695,000 claims filed the week that ended October 2, 1982. 

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="‘American workers have nowhere to hide’” data-reactid=”40″>‘American workers have nowhere to hide’

The jobless claims number is likely to increase further in the coming weeks, according to Rupkey.

“We knew that massive job losses were coming because of reports that many workers were unable to file a claim for benefits even after waiting on line for hours,” he wrote. 

This is perhaps an indication that U.S. economy has “skipped recession and has already moved deep into the depression zone,” he added. “American workers have nowhere to hide as the job layoffs are going to go global as world trade collapses.”

Economists, though not fully prepared for the extent of the unemployment claims figures as evidenced by all major consensus estimates being lower than the latest jobless claims, were at least mentally prepared for whatever is in store in the upcoming weeks and months.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“Economic data in the near future will be not just bad, but unrecognizable,” Credit Suisse economists led by James Sweeney wrote last week. “Anomalies will be ubiquitous and old statistical relationships within economic data or between market and macro data might not always hold… There is no blueprint for the current shock, and uncertainty about the extent of contagion and the economic consequences is overwhelming.”” data-reactid=”65″>“Economic data in the near future will be not just bad, but unrecognizable,” Credit Suisse economists led by James Sweeney wrote last week. “Anomalies will be ubiquitous and old statistical relationships within economic data or between market and macro data might not always hold… There is no blueprint for the current shock, and uncertainty about the extent of contagion and the economic consequences is overwhelming.”

Economists at Goldman Sachs warned that U.S. GDP would collapse 34% in Q2, which would be more than triple the record 10% drop seen in 1958.

In their latest note, Goldman analysts explained that “the anecdotal evidence and the sky-high jobless claims numbers show an even bigger output and (especially) labor market collapse than we had anticipated. This not only means deeper negatives in the very near term but also raises the specter of more adverse second-round effects on income and spending a bit further down the road.”