This Week’s Economic Data Is Terrible: Here Are The Latest Reports Showing The Impact Of Coronavirus

TOPLINEThe coronavirus pandemic continues to take a heavy toll on business activity as this week’s batch of dismal economic data stokes concerns on Wall Street and serves as a sobering indication of just how badly the outbreak is impacting the American economy.

Pedestrian walks past closed stores during pandemic — From a collapse in retail sales and manufacturing to millions of unemployment claims, the latest … [+] round of data is showing the severe impact of the coronavirus on the U.S. economy.

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KEY FACTS

Weekly jobless claims soared again, rising by 5.2 million since last week. That brings the total number of unemployed Americans over the last month to more than 22 million—erasing nearly all of the job gains in the last 11 years.

The Commerce Department said on Thursday U.S. home-building activity collapsed in March with new housing starts plunging by 22.3% from a month ago.

Data released by the Federal Reserve on Wednesday showed manufacturing output fell 6.3% and industrial output dropped 5.4% in March— the biggest drops since 1946.

Amid widespread business shutdowns due to the coronavirus, retail sales also plunged to a new low in March, falling a record 8.7%, according to a Commerce Department report on Wednesday.

Another economic indicator, home builder confidence, suffered its worst monthly drop in history—plunging to its lowest point since June 2012, according to the latest report from the National Association of Home Builders/Wells Fargo Housing Market Index.

The New York Federal Reserve’s Empire State Manufacturing Index fell by its biggest margin ever, to a historic low of negative 78.2—far worse than anything seen during either the Great Depression or the 2008 financial crisis.

Similarly, the Philadelphia Federal Reserve’s index of regional manufacturing business activity also sharply declined last month, dropping to its lowest level since July 1980.

Crucial quotes

The latest economic data is “very grim,” Vital Knowledge founder Adam Crisafulli admits. “We know April is going to be a disaster, we know May is probably going to be a disaster—but the question is can you see things stabilize at bad levels and resume from there?” He points to the fact that investors “can take some comfort” in the jobless claims figures showing evidence of plateauing—while still at elevated levels, the numbers are “not nearly as high as some people were fearing weeks ago” Crisafulli says.

“We finally got some economic data for this week, and while expectations were already low, the data was even worse,” Bespoke Investment Group said in a note.

“The economy is clearly in ruins here,” Chris Rupkey, chief economist at MUFG Union Bank, told CNBC this week.

Big number: 37 million.

That’s how many American jobs could be lost by the end of May, according to a forecast from Goldman GS Sachs. While monthly unemployment rose to 4.4% in March—up from 3.5% in February, it serves as a lagging indicator to the weekly unemployment claims. Goldman predicts that number will rise to at least 15% by the third quarter. Citigroup C economists, on the other hand, predict that the unemployment rate will skyrocket to between 10% and 15% already in April.

Crucial statistics

The economic decline triggered by the coronavirus pandemic is expected to reach a peak during the second quarter, with most economists forecasting a more than 30% drop in GDP. Firms such as JPMorgan JPM predict an even bigger decline—of 40%—in quarterly GDP, while also predicting the unemployment rate to hit 20% in April.

What to watch for

With earnings season kicking off earlier this week, early indications show that it’s not going to be pretty. The big banks, among the first companies to report first-quarter results, have so far posted weak earnings, warning that loan defaults are set to skyrocket. Institutions like Goldman Sachs, Bank of America BAC and Citigroup all posted earnings declines of 40% or more on Wednesday.