US unemployment report is much worse than economists predicted

Mass layoffs tied to the coronavirus pandemic sparked a surge in the number of Americans who filed for their first week of unemployment benefits — the late...

Posted: Apr 2, 2020 8:40 AM

Mass layoffs tied to the coronavirus pandemic sparked a surge in the number of Americans who filed for their first week of unemployment benefits — the latest sign that the US economy is in for a deep recession as shutdowns aimed at containing the virus continue.

The data: Over 6.6 million people filed claims for unemployment benefits in the week ending March 28, according to the US government. That is far more than economists expected and is double the all-time high set the previous week, when 3.3 million Americans filed initial claims.

The pre-coronavirus record was 695,000 claims in October 1982. Last week's claims were nearly 10 times that level.

Investors will get another indication of the damage done to the US labor market on Friday, when the government publishes its jobs report for March. But Bank of America economist Joseph Song said the real trauma will be revealed later. He expects the jobs report for April to show "unprecedented" losses and an unemployment rate in the double digits.

The spike in initial claims last week can be attributed to a few factors. Big companies have reported layoffs or indefinite furloughs since the last report, Song observed. And the $2 trillion US relief package passed late last week made unemployment benefits more generous, while extending benefits to self-employed and gig economy workers who weren't covered before.

On the radar: The previous week's figure was also revised slightly higher, from 3.28 million to 3.31 million.

Liz Ann Sonders, chief investment strategist at Charles Schwab, warned that the previous report may have been artificially low due to a backlog of benefit applications. There's anecdotal evidence that "a lot of people who tried to file [claims] weren't able to, because phone lines were overloaded," she recently told me.

US stock futures shed some gains after the report posted. Dow futures are up 115 points, or 0.6%. S&P 500 futures are 0.5% higher, while Nasdaq futures have climbed 0.4%.

Oil jumps on hopes of a Saudi-Russia truce

Optimism that Saudi Arabia and Russia will call off their price war has sent crude prices higher — though it's not clear that two of the world's top oil producers are actually weighing a truce.

The latest: President Donald Trump said during a press conference on Wednesday that he'd spoken with the leaders of Russia and Saudi Arabia and thinks "that they will work it out over the next few days."

"It's just too simple not to be able to," he said.

Brent crude futures, the global benchmark, have shot up 10.4% to more than $27 per barrel as a result. US oil has rallied 10% to $22.35 per barrel.

A deal would bring welcome relief to the battered oil market. Prices collapsed after a pact between Saudi Arabia and Russia to limit production broke down, exacerbating a supply glut as thirst for oil dries up.

The situation is so dire that the world could soon run out of room to store all the unneeded barrels of oil, my CNN Business colleague Matt Egan reports.

Whether Saudi Arabia and Russia can come to terms remains to be seen. Russian Energy Minister Alexander Novak told Reuters Thursday that the country has not discussed the oil market situation with Saudi Arabia but does not rule this out.

WeWork founder misses out on $1 billion

SoftBank is walking away from a sizable chunk of its WeWork rescue package, which included a nearly $1 billion windfall for ousted founder Adam Neumann, my CNN Business colleague Sherisse Pham reports.

Details: The Japanese tech company has backed out of a plan to buy $3 billion worth of shares in the coworking startup from existing shareholders and investors, according to statements from SoftBank and a special committee of WeWork's board. Shares in SoftBank closed up 2.5% in Tokyo following the announcement.

The about face cuts deep for Neumann — the October agreement had included an offer to buy up to $975 million worth of the WeWork founder's shares — and is further evidence that SoftBank CEO Masayoshi Son is stepping back from his trademark high-risk investment strategy after the company's shares cratered earlier this year.

And it's a major blow to WeWork, which has been hit hard by the coronavirus pandemic after its botched IPO left it on the brink of insolvency. Many cities where it operates have shut down for weeks on end. It still has to pay long-term leases, even if businesses squeezed by the outbreak cancel contracts.

Up next

Walgreens Boots Alliance reports earnings before US markets open. Chewy follows after the close.

Coming tomorrow: How much did the US unemployment rate tick up in March? Economists surveyed by Reuters think it rose to 3.8% from a record low of 3.5%.

California Coronavirus Cases

Data is updated nightly.

Cases: 3074812

Reported Deaths: 35060
CountyCasesDeaths
Los Angeles103873814416
San Bernardino2569141560
Riverside2510002676
San Diego2185552174
Orange2165092508
Santa Clara949051129
Kern87240572
Fresno83200968
Sacramento811831128
Alameda68649788
Ventura62774462
San Joaquin58843788
Contra Costa53349460
Stanislaus43121766
Tulare42186515
Monterey36464255
San Mateo32887309
San Francisco29502266
Solano25983107
Santa Barbara25405243
Imperial25333474
Merced24570316
Sonoma24184242
Kings19588148
Placer17490184
San Luis Obispo16056140
Madera13528151
Santa Cruz12461113
Marin11732159
Yolo10789138
Shasta9750123
Butte9528128
El Dorado788649
Sutter782879
Napa767244
Lassen519916
San Benito500346
Yuba499627
Tehama433244
Tuolumne340340
Nevada323474
Mendocino319232
Amador302431
Lake262531
Humboldt242725
Glenn194820
Colusa17969
Calaveras162123
Siskiyou145713
Mono11244
Inyo98329
Del Norte8672
Plumas5895
Modoc3853
Mariposa3464
Trinity3044
Sierra820
Alpine730
Unassigned00
Chico
Cloudy
55° wxIcon
Hi: 62° Lo: 35°
Feels Like: 55°
Oroville
Mostly Cloudy
55° wxIcon
Hi: 62° Lo: 46°
Feels Like: 55°
Chico
Mostly Cloudy
55° wxIcon
Hi: 57° Lo: 43°
Feels Like: 55°
Red Bluff
Partly Cloudy
45° wxIcon
Hi: 44° Lo: 18°
Feels Like: 43°
Red Bluff
Partly Cloudy
45° wxIcon
Hi: 57° Lo: 36°
Feels Like: 43°
Chico
Partly Cloudy
55° wxIcon
Hi: 61° Lo: 34°
Feels Like: 55°
Thursday was the last fairly quiet weather day that we'll have in northern California as a series of storms will move our way through next week. Our first chance for rain and snow showers arrives Friday morning with a cold front.
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