The leading indicator on the health of the job market is the Initial Jobless Claims report, which essentially tells us the length of the unemployment line. And that line just grew.
Over the past four weeks, approximately 22 million people have filed for unemployment benefits, erasing nearly a decade worth of job creation.
Although the unemployment rate is likely 13% or higher, this is temporary in nature due to the coronavirus. We expect many people will be headed back to work relatively soon as the virus passes.
We won’t see the “pre-virus” 3.5% unemployment numbers for some time. However, the economy is expected to bounce back sharply as pockets of the country begin to reopen, putting people back to work.
There remains incredible opportunity during these uncertain times. Home loan rates are at all-time lows, affording many people the opportunity to refinance and restructure their personal debt.
With the Fed continuing to buy mortgage-backed securities, rates should hover near current levels for the foreseeable future.
Forecast for the Week
The upcoming week will continue to be impacted by the coronavirus headlines and the economic slowdown associated with the virus fallout.
First quarter earnings reports will continue to be released in the upcoming week with the numbers being impacted halfway through the quarter due to the coronavirus outbreak.
All eyes will continue to watch the ever-surging Weekly Initial Jobless Claims numbers after 22 million first-time claims were reported in the past four weeks. The economic calendar is on the light side.
The Federal Reserve will continue to purchase mortgage-backed securities in the open market to add liquidity and to stabilize the market, not necessarily to lower rates.
Reports to watch:
- Housing data will come from Tuesday’s Existing Home Sales and Thursday’s New Home Sales.
- Weekly Initial Jobless Claims will be released Thursday with Durable Orders and Consumer Sentiment.