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Thousands of workers in California are turning to the state's unemployment system for a 2nd time. Indeed, more than ½ of the people who recently applied for unemployment benefits in the Golden State had lost their jobs (or had their hours cut) again after having returned to work. It's a drastic rise from earlier in the coronavirus pandemic & hints at the fickle nature of the economic recovery across the country. California is among the states that had to re-institute measures from earlier in the pandemic to shut down sectors of the economy in hopes of halting recent flare-ups of Covid-19. Gov Gavin Newsom ordered bars to close & restaurants to halt indoor dining in mid-Jul. Wineries, tasting rooms, movie theaters, zoos, family entertainment centers, museums & cardrooms also had to cease indoor operations statewide. Officials in states like Texas, Arizona & Florida have reimposed some shutdown measures is recent weeks amid spikes in new coronavirus cases. Those closings threaten a gradual recovery in May & Jun that saw 7.5M Americans return to work. The unemployment rate fell from a peak of 14.7% in Apr to 11.1% in Jun, still higher than any period since the depression. In California, 247K workers filed a new application for traditional state unemployment insurance last week. Most applicants — 57%, or around 140K workers — represented “additional claims.” That means they had received benefits earlier, returned to work & are now applying for benefits again because they lost a job or had their hours cut significantly (which may make them eligible for partial benefits). The accommodation & food services, retail trade, & arts & entertainment fields — among the hardest-hit by the pandemic — make up a disproportionate share of “additional claims.” About 1/3 of the total workforce, more than 6M unique people, have applied for unemployment benefits since mid-Mar.
Don't hold your breath for another coronavirus aid deal from Congress soon. Rep & Dem congressional leaders showed few signs of movement & the departure of the Senate for the weekend indicated a ratcheting down of expectations on Capitol Hill. Ahead of yet another meeting late today between House Speaker Nancy Pelosi, Senate Dem Leader Chuck Schumer, White House Chief of Staff Mark Meadows & Treasury Secretary Steve Mnuchin, Pelosi & Senate Majority Leader Mitch McConnell traded barbs. “While they focus on unrelated liberal demands like tax cuts for rich people in blue states, we’re focused on serious solutions for the problems facing Americans right now,” McConnell said as he opened up the Senate for its Thurs session. “Instead of getting serious, the Democratic leaders have chosen instead to misrepresent and even lie about what’s at stake,” he added. McConnell was referring to the Dems bid to reverse the limitation on federal tax deductions for payment of certain state & local taxes which would arguably help upper-income earners in Dem states. “Perhaps you mistook them for somebody who gives a damn” about people hurt most economically by the virus and the resulting lockdown, Pelosi said.
Mortgage rates fell to another record low this week, the 8th record set this year. But home affordability is weakening as the housing shortage, high demand from buyers & rising home prices negate the benefits of lower rates. Only 59.6% of new & existing homes sold in the 2nd qtr of this year were considered affordable to families earning an adjust median income of $73K, according to the National Association of Realtors (NAHB). That's down from 61.3% in the first qtr & is the lowest reading in 18 months. NAHB did make an adjustment to median income estimates to account for the coronavirus pandemic. The index based its calculations on the national median home price jumping to a record $300K from $280K & average mortgage rates falling 27 basis points. The inventory of existing homes for sale at the end of Jun was down 18.2% annually, according to the National Association of Realtors, leaving just a 4-month supply available. Supplies of newly built homes also fell 14.5% annually, according to the US Census.
Oil futures ended a choppy trading session in negative territory, snapping a 4-day winning streak, as investors weighed a surprising fall in US weekly first-time jobless claims against worries about lackluster fuel demand. West Texas Intermediate (WTI) crude for Sep lost 24¢ (0.6%) to close at $41.95 a barrel. Oct Brent crude, the global benchmark, fell 8¢ to settle at $45.09 a barrel. US initial jobless claims unexpectedly fell by 249K in early Aug to a still eye-watering 1.19M & touched the lowest level since the coronavirus pandemic began more than 4 months ago. Meanwhile, Saudi Aramco set its official selling price, or OSP, for Europe & Asia at 90¢ a barrel over the Oman/Dubai average, down 30¢ from Aug. WTI & Brent yesterday broke out of a longstanding trading range. Both posted their highest settlements since early Mar, but ended off session highs even though the Energy Information Administration said US crude stocks fell by a larger than expected 7.4M barrels last week.
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