May 14, 2020
An additional 3 million-plus jobless claims were filed last week. Federal agencies extended their moratorium on evictions and foreclosures. And JP Morgan Chase quantified how spending patterns have changed amid the coronavirus outbreak.
Almost 3.5 million jobless claims were filed last week
- 2.6 million claims were officially made last week (non-seasonally adjusted), according to the Dept. of Labor, the eighth straight week of more than a million claims.
- An additional 842,000 claims were made through a separate program aimed at providing support to self-employed people and others who don't qualify for traditional benefits.
Government agencies extend moratorium on foreclosures and evictions
- The Federal Housing Finance Agency and Department of Housing and Urban Development extended programs prohibiting foreclosures and evictions on homes they guarantee.
- Originally announced in March, the programs were set to expire at the end of this week.
JP Morgan Chase sheds light on spending patterns
- In the first month of the pandemic, higher-income households reduced credit card spending by a larger percent than lower-income households.
- Official data on April retail sales figures will be released tomorrow.
For the eighth week in a row, more than 3 million unemployment claims were made last week. The headline number from the Department of Labor suggests slightly fewer claims were filed. But that number fails to include figures from Pandemic Unemployment Assistance (PUA) claims – a program recently set up to allow individuals who are either self-employed or otherwise ineligible for traditional unemployment benefits to apply for some relief. An increasing number of states – 29 this week, up from 23 a week before – are using the PUA program, which provides up to 39 weeks of unemployment benefits. Still, it’s clear that the labor market is in dire straits. Since the last week of data included in the April jobs report, a total of 11.6 million claims have been filed, with a large gap remaining between the number filed claims and the number of people actually receiving assistance. Given this, Goldman Sachs now estimates the unemployment rate will spike to 25% in the coming months — a level equal to the peak jobless rate during the Great Depression.
Following yesterday's announcement of a deferral program for mortgage borrowers with loans in forbearance, the federal housing agencies today announced extensions to other policies aimed at providing relief to households impacted by the coronavirus. In March, Fannie Mae, Freddie Mac and the Department of Housing and Urban Development (HUD) announced a two-month suspension on foreclosures and evictions on homes with mortgages they guarantee (in the case of the HUD, on FHA-backed loans). With the policies scheduled to expire in the next few days, the agencies decided to extend these rules through at least the end of June. Technically, Fannie and Freddie's policies apply directly only to single-family mortgages, although the agencies also offer separate protection for renters of units in multi-family buildings (Fannie or Freddie hold or back about half of the nation's outstanding multifamily mortgage debt) through a separate policy.
The Department of Commerce's official report on April retail sales activity is set to be released tomorrow, but a recent report from JP Morgan Chase that examines weekly credit card spending offered a sneak peek of what to expect and insights into how spending patterns have changed across different demographics. Among its key findings, the report suggests that while all groups have significantly reduced spending in recent weeks, higher-income households decreased their weekly outlays by more than lower-income households, both in dollar amount and percentage terms. While credit card spending fell about 40% year-over-year by the end of March, it held fairly consistently in the subsequent two weeks. Weekly spending by the top income quartile decreased by about 46 percent, or $400, compared to declines of 38 percent, or $150 among the bottom quartile. A number of factors could be contributing to this divergence, but a big one could be that higher-income households spend more on non-essential categories as a share of their entire spending than do lower income households, and thus had the luxury to limit outlays on items they didn't necessarily need. The expectation for tomorrow's official report, meanwhile, is that spending will have fallen about 12.5% in April from March.
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