- Jobless claims climb to 26.4 million in 5 weeks.
- Consumer sentiment has fallen but has stabilized.
- Consumers not keen on car and house buying.
COVID-19 cases keep growing in the U.S., but the pace of increase is slowing since the peak in new cases occurred two weeks ago. The declines are inconsistent with individual markets having their own pandemic curves. Testing is ramping up but remains inadequate. Stay-at-home orders across the country have caused businesses to close temporarily, and that has led to a massive increase in the temporarily unemployed.
Jobless claims rise: The damage to the economy can be seen in declines in home sales in March and in jobless claims that keep growing. 26.4 million Americans have applied for unemployment compensation over the last 5 weeks (through April 17). The employment report in April will set a record for job losses and could see the unemployment rate rise to levels not seen since the Great Depression. The rest of the year could see some recovery, but it will depend on how the pandemic plays out.
A current positive but future negative for the economy is that many hourly workers are now receiving more compensation each week thanks to the added Federal $600 per week enhancement.
Consumer sentiment low: Consumer sentiment has fallen since February but has stabilized in the back half of April. The final reading on Consumer Sentiment in April from the University of Michigan was down from March but was slightly better than initially reported at mid-month. The 19% decline in sentiment was the largest monthly decline in history. The Michigan index has declined 29% from its high mark for the year in February. Morning Consult’s daily Consumer index was relatively stable last week.
Consumers balk at car buying: Data from the University of Michigan show that consumers were less enthusiastic about buying vehicles in April. The view of vehicle buying conditions deteriorated by 11%, but consumers expect that prices are better. Retail sales of vehicles continued to see recovery this week. Cox Automotive estimates that new retail vehicle sales were down 53% year over year last week. Used sales were down 30% year over year. Still, both were much improved from the previous week.
Consumers sour on home buying: Additional data collected by the University of Michigan show that consumers have soured on buying and selling homes. The view of buying conditions for a house fell 21% in April primarily related to economic uncertainty increasing. The view of buying conditions for a large house fell 39%. The view of selling conditions fell even more dramatically in April, down 57%.
New and existing home sales declined in March as the COVID-19 pandemic interrupted home showings and closings. The existing home sales SAAR declined 8.5% in March, the largest monthly decline since November 2015. The pandemic is hurting demand as well as supply. Inventory fell 10% year over year in March. Even with the sales decline, the months’ supply fell to 3.4 months, when 6 months is normal. The pace of existing home sales is now up 0.8% from a year ago. The new home sales SAAR declined 15.4% in March, which was the largest monthly decline since July 2013. The pace of new home sales is now down 9.5% from a year ago.
Check back tomorrow for a video that will include updated data.