Published June 5, 2020
Financial results for the first quarter of 2020 have been reported by most members of the S&P 500, showing corporate earnings down 11.2 percent year on year, even though revenues were up 1.9 percent. Due to the COVID-19 virus, S&P earnings for the full year 2020 are expected to be down 23 percent or more. Growth is expected to resume next year, largely because of the easy comparisons with this year.
In the meantime, unemployment remains very high and rising. The Labor Department’s monthly employment report for April shows the jobless rate soared to 14.7 percent – the highest level since the Great Depression. The U.S. has lost 20.5 million jobs amid the coronavirus pandemic. Almost all the job growth achieved during the 11-year recovery from the Great Recession has now been lost in one month.
On June 5 (after this column was written), the Labor Department was to have released May’s employment report, and expectations were for 9 million additional people to have lost their jobs. This would increase the unemployment rate to slightly more than 20 percent. The Labor Department says the real unemployment rate is likely higher, because about 7.5 million workers should have been classified as “unemployed on temporary layoff,” instead of employed but not at work.
The stock market has gone up even as the economy has weakened and riots in many cities have destroyed businesses already teetering from the impacts of virus-related shutdowns. The market seems to have disconnected from the economy and the social unrest, largely because the White House and Federal Reserve continue to provide monetary stimulation.
European economies burdened with troubled industries, like car manufacturing, energy and […]