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More than 30 million ask for unemployment benefits 2:46
London (CNN Business) - Since mid-March, Americans have submitted more than 30 million applications for the first week of unemployment benefits, sparking an unemployment crisis that materialized almost overnight.
With closures across the country, companies have been forced to lay off or suspend large-scale employees. Now economists and investors are struggling to determine the extent of the problem. Unemployment in the United States is expected to remain high for some time, weighing on any economic recovery once the restrictions begin to lift.
"We will go up by elevator and down the stairs," said Torsten Slok, chief economist at Deutsche Bank Securities.
Slok believes unemployment would have peaked in April. Economists surveyed by Refinitiv expect the unemployment rate to have reached 16.1% last month, which would be its highest level since 1939. The US government releases its latest jobs report on Friday.
The assumption right now is that a large portion of unemployed Americans will be able to return to work in no time.
MIRA : Applications for unemployment benefits in the USA reach historical figures
"With a large proportion of the new unemployed appearing to be on temporary layoff rather than permanently losing their jobs, there is a good chance they will return to paid employment once the closure measures are lifted," he said Friday. to his clients Andrew Hunter, an economist at Capital Economics.
Capital Economics predicts that even if the unemployment rate had risen to 20% in April, it would still end the year below 10%.
But a 10% unemployment rate is still extremely high, Slok noted. The unemployment rate in February was at a nearly 50-year low of 3.5% before jumping to 4.4% in March.
This level of unemployment will inevitably affect consumer spending, which accounts for about 70% of the country's economic output, Slok said. It's one of the reasons you expect the bounce to look more like a Nike symbol than a sharp "V".
Check this out: The US employment report on Friday will also contain crucial information on who exactly has lost jobs so far. Economists are interested in how layoffs have spread among skilled and unskilled workers, and want more demographic information.
Investor Perspective: So far, stocks have largely ignored dire economic data, with the S&P 500 posting its best month in April since 1987. But a worse unemployment rate than Wall Street expects could still impact, especially As geopolitical tensions mount and companies continue to warn investors about the difficult road ahead.
READ : Lessons from China: How Business in the World Has Changed Forever
How bad is the coronavirus for hotels and theme parks?
Orders to stay home have paralyzed the hotel industry and reduced the shares of hotel, travel and entertainment companies. This week, investors will take a closer look at the damage done, and executives will be forced to comment on the way forward.
The main event is Disney's earnings, which arrive on Tuesday. The company, just after one of its best years, is now struggling.
What Happens: Disney parks and resorts have closed around the world, forcing the company to suspend thousands of employees. Great movies like "Mulan" have been delayed. And one of its largest media networks, ESPN, is struggling to fill its airtime without live sports.
Shares are down 27% this year, while the S&P 500 is down 12%. And S&P recently downgraded Disney's credit rating to "A-", noting that many of Disney's companies "require social interactions."
READ : Disney World and Disneyland: How will it be reopened? When will the parks open?
All of this adds to pressure on Chief Executive Bob Iger and Chief Executive Bob Chapek, who are expected to present their plans for Disney's business in a post-closing world.
Also on the radar: Earnings from Hilton, Hyatt, SeaWorld, Wynn Resorts and the owner of Booking.com Booking Holdings.
What follows
Monday: Tyson Foods, Shake Shack, XPO Logistics earnings
Tuesday: United States Trade Balance; earnings from Fiat Chrysler, Activision Blizzard, Beyond Meat, Match Group, Mattel, Disney and Wynn Resorts
Wednesday: ADP Employment Report; earnings from CVS, New York Times, Papa John's, Hyatt, Lyft, PayPal, Peloton and Square
Thursday: Bank of England interest rate decision; China's trade balance; Initial jobless claims and consumer credit from the United States; and earnings from Anheuser-Busch InBev, Edgewell Personal Care, Hilton, Booking Holdings, Live Nation, Uber, and Zillow.
Friday: United States Jobs Report; UK Consumer Confidence; Earnings from Hostess Brands and SeaWorld Entertainment
Unemployment