U.S. Stock Market Rattled as Millions of Jobs are Permanently Dead
May 20, 2020 @ 14:56 +03:00
Unemployment claims in the U.S. continue to sharply increase as businesses struggle to deal with the economic pressure from the pandemic. The stock market is hinting at the start of a new downtrend after a week of rallying.
The U.S. stock market fell by 1.59% on May 20, marking its first significant pullback in over a week. The U.S., China, and the U.K., among many other major economies, are seeing a rapid upsurge in jobless claims. The reopening of the economy has not shown a positive effect on curbing unemployment levels.
China, the U.K., and the U.S. ambitiously began allowing factories to open, preparing the majority of the general population to reenter the workforce. But, within a month since such efforts, China locked down more than 100 million people in its Northeast region. The cautious stance of businesses is leading to stalled hires and companies are not rushing to expand, despite the strong recovery of the stock market earlier this month.
According to data from BNP Paribas obtained by Bloomberg, job losses in China likely exceed 50 million with the unemployment rate hovering at 12%.
Even with a government-supported program, the U.K. is expected to see an unemployment rate of 20%. The U.S. stock market is seemingly pricing in a quick economic turnaround in the near-term as the nation stabilizes in the aftermath of the coronavirus pandemic. Economists, however, do not believe a v-shape recovery is imminent. Stanford University economics professor Nicholas Bloom found in a study that 42% of layoffs in the U.S. will result in permanent unemployment.
That means, with more than 36 million jobs lost within merely two months, Bloom sees at least 15 million jobs becoming a permanent loss.
As various studies and data increasingly suggest a low probability of short-term economic prosperity, the stock market may see a healthy correction as it approaches the third quarter.
Total unemployment claims in the U.S. since March total 36 million, with China exceeding 50 million and U.K. projected to see 12 million. Unemployment claims in the U.S. continue to sharply increase as businesses struggle to deal with the economic pressure from the pandemic. The stock market is hinting at the start of a new downtrend after a week of rallying.
U.S. Stock Market Rattled as Millions of Jobs are Permanently Dead, CCN, May 20