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Look forward at April 20, 2020 week: Another round of gloomy economic data on the calendar

A look forward at the April 20 week includes a number of data reports for March and April which are likely to continue the theme of the prior week, i.e. the economic indicators confirm the abrupt and severe slowdown in activity as the US enters a recession. It is not a particularly busy calendar, but the reports will elaborate on conditions in the housing market, manufacturing and service sectors, and consumer confidence. Fed policymakers are going to be out of earshot during the communications blackout period around the April 28-29 FOMC meeting. Local, state, and federal authorities may announce more details about how stay-at-home orders could be eased. Much will depend on how the information about the spread of COVID-19 reads.

For a fifth week running, the focus of the week will be on levels of initial jobless claims. The data for the April 18 week is at 8:30 ET on Thursday. Most news outlets are focusing on the seasonally adjusted level of more than 22.0 million claims filed in the past four weeks. However, I think the unadjusted level of 17.2 million is the more accurate take on the situation. It is still a dire increase, but more realistic than applying an adjustment factor that has not relation to the current circumstances. There’s probably going to be some revision to the data of the past week or two – perhaps substantial – in light of widespread reports of problems in filing as state computer systems are overwhelmed. The unadjusted levels of claims for those whose applications for benefits have been approved in the April 4 week are likely to climb close to the number of new filings in the prior four weeks, i.e. around 20.1 million. The unadjusted rate of insured unemployment has jumped about 3 percentage points in the prior two weeks and could easily match that again in the April 4 week.

New orders for durable goods in March at 8:30 ET on Friday are anticipated to be weak overall even if there is a mild bump higher due to aircraft orders. Elsewhere orders are anticipated to have fallen substantially.

Regional surveys of manufacturing for April point to even further weakening in orders. The data from New York and Philadelphia will be joined by the Kansas City Manufacturing Index at 11:00 ET on Thursday. Here, too, the plunge in new orders and widespread shutdowns in production should be clear.

Regional surveys for the service sector in April will be released with the Philadelphia Nonmanufacturing Business Outlook at 8:30 ET on Tuesday and the Kansas City Services Survey at 11:00 ET on Friday. The New York Business Leaders Survey showed a steep plunge in activity that is expected to be repeated in the other regional reports.

Data on home sales in March could be a little confusing. The NAR’s existing homes sales report at 10:00 ET on Tuesday is for contracts closed. That means that home buys that were in the works back in February probably made it through, at least in the first half of the month. Some of the February pending sales may have been cancelled for buyers on the margins, especially those employed in sectors related to travel and hospitality. Sales of new homes at 10:00 ET on Thursday is probably going to feel the pinch as consumers turned cautious about making major purchases. A lot of the sales for units not yet started or under construction may have disappeared.

The preliminary University of Michigan Consumer Sentiment Index for April was down 18.1 points to 71.0. The final reading could well be revised even lower. Consumers’ confidence crashed in April due to the sudden and deep worsening in labor market conditions and worries that temporary layoffs could cause severe financial hardship for households. The data gathered since the preliminary survey will show that current conditions have deteriorated even since the start of the month, while the six-month outlook is gloomier as well.



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