The Coronavirus and the Economy, Including the Financial Industry

Coronavirus rules the day. In Italy, it reached the highest possible Google Search trend value of 100. Following Italy’s search interest is Spain at 84, France at 68, Ireland at 63, and Qatar at 62. Most countries for which Google has reasonably accurate search information, the Google Trend value is 50 or greater, indicative of heavy interest.

With interest high, how is its effect showing up on the economy, and in particular on the financial sector. Let’s take a look.

Unemployment Insurance Claims

Perhaps the most popular indicator analysts are using the gauge the effect of the coronavirus are the weekly unemployment insurance claims figures. How do they look? Not pretty. Leading up to the middle of March, the highest weekly unemployment insurance claim for any week on record was 695,000 in October 1982. That changed for the week of March 21^st. Initial unemployment insurance claims came in at 3.3 million and was following up by an additional 6.9 million claims on March 28^th and 6.6 million claims on April 4^th. Truly, the coronavirus effect is something different than the global economy has ever seen before.

Job Growth

What about overall job growth? How does that look? The picture according to the BLS’ monthly jobs survey is far from pretty as well. April’s report indicated that the economy lost 701,000 jobs in the month of March. The 707,000 likely understates the unemployment picture because it only includes jobs lost through the 15^th day of March. The first Friday in May will give us a much better idea of the employment picture.

Financial Industry Job Growth

The financial industry operates within the broader economy. Is it holding up better or worse than other industries? The following figure has the answer for the most recent data through March 15^th. Perhaps unsurprisingly, the finance industry is holding up better than most other industries. In fact, the finance industry actually added jobs in March to the tune of 2,500 jobs. This might be due to increasing demand for loans and other financial products.

The better-than-average picture for the financial industry may not last if the social distancing directives are not ending soon, as much of the financial industry’s business comes from in-person transactions.

Conclusion

The coronavirus effect is showing up everywhere, including the financial sector. Unless the economic impact subsides, a Greater Depression likely awaits the global economy.