ARLINGTON, Va.—As CUToday.info reported here, last week’s extraordinary spike in unemployment claims to 3.2 million was expected to be big, but NAFCU Chief Economist and Vice President of Research Curt Long described the number is nonetheless "shocking.”
"As bad as it was, the actual number of layoffs is probably higher," said Long. "Many states struggled to process the wave of claims, which likely will push some of last week’s total into next week’s release. California in particular reported 187,000 new claims, but Gov. (Gavin) Newsom had indicated that over one-million claims have been filed in the past week-and-a-half."
Ahead of the report's release, Long developed an economic brief detailing the coronavirus' impact.
Long noted the Commerce Department's final GDP estimate indicated the U.S. economy grew 2.1% in the fourth quarter. The number remained unchanged from the second estimate.
According to the updated estimate, contributions to growth of real GDP came from gains in net exports (+1.5%), consumption (+1.2%), and government spending (+0.5%). However, changes in inventories (-1%) and business investment (-0.3%) slowed growth.
Additionally, corporate profits rose 2.6% (not annualized) in the fourth quarter, driven by domestic profits. Gross domestic income also rose 1.6%.
A ‘Bygone Era’
"This report offers little more than a chance to reflect on a bygone era. The headwinds of late 2019 and early 2020 (Boeing shutdown, supply chain disruptions, UAW strike) look quaint by comparison to the present crisis," noted Long. "Business closures, layoffs, and plummeting investments are sure to negatively impact Q1 numbers, and more so Q2.”
"The question of how bad this will be and how long it will last remains extremely uncertain. However, even after the worst has passed, uncertainty is likely to linger," he added. "NAFCU expects a severe contraction through the middle of the year, followed by a more tepid and uneven recovery than many are anticipating."