Period: May 2-8, 2020
Main event: The main event of the week was the recognition of the head of the US Regional Reserve Bank of Minneapolis, Neel Kashkari, that the data on unemployment do not correspond to reality. According to him, the fact is that these statistics take into account only those people who are «actively looking for job», so real unemployment in the US is at a «terrifying» level of 23-24%.
«People are asked: are you actively looking for job? And many people who have just lost their jobs have not yet begun to actively seek it» — said the banker
Neel Kashkari also expressed hope that the US economy will be able to recover, but it will be a «ong and gradual process.
«I don’t think that we are going to a new Great Depression» — he said optimistically
Industrial orders in the USA in March fell by 10.3% per month – a record worst dynamics; in the transport sector -41.3%, in Germany – by 15.6% (and 16.0% per year): an anti-record for 45 years.
Industrial production in Germany fell by 9.2% per month (global anti-record) and 11.6% per year (bottom since 2009).
France is even worse:
Spain also does not shine:
India’s manufacturing PMI is at a record low, as are Brazil, Mexico, Canada and Europe.
In the service sector, record lows are everywhere. In Australia, India, Great Britain, USA and Russia:
Business activity in New York is the worst in 27 years of review, and the level is phenomenal – only 4.3% of optimists.
Car sales in Spain in April fell 30 times a year to a record low in 36 years of statistics.
Eurozone retail collapsed in March at 11.2% per month and 9.2% per year – with a huge margin, the worst numbers in 25 years of observation. France is especially bad (-17.4% per month and -16.0% per year).
The number of job postings in Australia in April fell by 53% per month and 62% per year to a minimum of 21 years of observation.
In China, PMI is not so bad – but still in a recession zone:
There were 20.5 million less jobs in the USA in April – the previous anti-record of the late 1940s was almost five times beaten. The unemployment rate jumped to 14.7% – the highest since October 1940.
Moreover, the Ministry of Labor reported that many really unoccupied individuals passed as «having work, but absent from it» – otherwise unemployment would be about 20%.
The Central Bank of Brazil cut the rate by 0.75% to a record low of 3.00%.
The Bank of England left things as they were, although 2 out of 9 board members wanted to expand incentives; Britain’s GDP forecast for 2020 is -14%.
Conclusions: Many countries began to gradually lift quarantine restrictions and this created the illusion that the situation would return to the situation before the epidemic. The authorities, in turn, actively fuel this idea (see the words of Neel Kashkari above). The situation in China suggests the same idea, where, it seems, the situation began to improve. However, the level of unemployment and falling orders, as well as the scale of stimulation of the economy, suggests that the structural crisis is only beginning and there will be no return. Accordingly, economic entities (including entrepreneurs) need to actively think about how they will integrate into this new structural reality.