This Week in Economic News: July 24, 2020
Unemployment Insurance Initial Claims and Continuing Claims
Targeted Lockdowns Contribute to First Increase in Initial Claims in Four months
- Initial claims increased for the first time in nearly four months by 109,000 to 1,416,000 over the last week. This could be the result of businesses reclosing due to the surge in COVID-19.
- In the same report, continuing claims decreased by 1.1 million to 16.2 million. The reason why continuing claims continues to decrease while initial claims increased is that continuing claims has a one-week lag. If that is the case, we may see a much smaller decrease, or an increase, in continuing claims next week.
- The record for initial claims was nearly 7 million due to the pandemic. A normal rate for initial claims is an average of 350,000 per week. The record for continuing claims is nearly 25 million due to the pandemic. The historical average of continuing claims is approximately 2.7 million.
(About initial and continuing claims: Initial claims are new claims by jobless workers who are looking to receive unemployment benefits. Continuing claims are those who continue to receive unemployment benefits because they have not found a job yet. Continuing claims do not count all jobless workers – just jobless workers who are receiving unemployment benefits. There may be jobless workers who do not apply for, are ineligible for, or exhausted all of their unemployment benefits which would not be counted)
Existing Home Sales
After Three-Month Decline, a 20.7% Jump in Existing Home Sales
- On July 22, the National Association of Realtors reported that existing home sales jumped by 20.7% in June.
- After three continual months of declining sales, this jump was likely due to the economy opening up which allowed potential homeowners to walk through homes on the market instead of taking virtual tours online.
- Federal Reserve action succeeded in making mortgages more attractive: The Federal Reserve slashed interest rates to stimulate the economy and mortgage rates declined.
(About existing home sales: Existing home sales measure the amount of sales and the pricing of existing single-family homes, condos, and co-ops across the nation. This market accounts for 15% to 18% of the U.S. economy with 90% of total home sales being existing homes.)
GDP Estimates to Reflect Impact of Covid Lockdowns on Economy
When: Thursday, July 30th, 2020:
What to Expect: Given the sudden severity of COVID-19, the market expects the worst of COVID’s damage to have occurred in the second quarter of this year (between April and June). According to the Wall Street Journal survey of economic forecasters, GDP for the second quarter is expected to drop by 31.91% on an annualized basis.
(About GDP: The growth rate of GDP measures how much the economy, and therefore a nation’s wealth, is growing. They are released in estimates regularly by the Bureau of Economic Analysis in the Commerce Department.)
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