Jobs, jobs, jobs

Posted by: Paul Donovan

26 Mar 2020
  • The US Senate passed its fiscal package. The US House should vote on Friday. The deal is large (around half the normal US annual budget, although loan guarantees will not increase the deficit now). About 1.6% of GDP targets saving jobs - perhaps two months of support. Overall, the US is more focused on helping the unemployed. Europe is focused on stopping unemployment.
  • UK universal credit application numbers suggest a surge in unemployment. This is paid to people who are not unemployed as well. The UK has arguably done more to try to keep people in jobs, so this does matter.
  • US initial jobless claims numbers are expected to be very, very large. If lots of Americans lose their jobs, the start of phase two (economic bounce-back) will be delayed. More unemployed means less consumption. Today's data may have accuracy issues, if there were not enough people to process and count the number of claims.
  • The Bank of England will cheerlead, but not do anything. US fourth quarter GDP is irrelevant. Eurozone politics continues. Singapore's first quarter GDP fell around 2.6% q/q. Ignore reports of a 10.6% drop. That is annualized growth. Annualizing is meaningless in this crisis. Manufacturing grew, services and construction fell.

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