Week In Review
Initial jobless claims for the week ending April 18 totaled over 4.4 million.
26.5 million people have now filed for unemployment insurance over the last five weeks. Next month’s unemployment number is sure to be horrific. Hopefully, many of these filers will return to work as the economy reopens. Time will tell.
March existing home sales fell 8.5%, while new home sales plummeted 15.4%. Durable goods orders fell 14.4% in March, but non-defense orders excluding aircraft and parts actually rose 0.1%.
First quarter GDP growth will be reported next week and may be positive. Bear in mind, however, that the COVID-19 pandemic hit in mid-March. Most of the economic devastation has occurred in April. Q2 GDP will almost assuredly be devastatingly negative.
In a radio interview this week discussing the effect of the pandemic on state government and finances, Senate Majority Leader Mitch McConnell stated, “I would certainly be in favor of allowing states to use the bankruptcy route.” McConnell suggested that bankruptcy could be an option for states rather than receiving federal funds. Many Republican and Democratic lawmakers from across the country quickly criticized McConnell’s comments.
The federal bankruptcy code does not allow states to file for bankruptcy. However, McConnell’s controversial statements draw attention to the current financial condition of the states. Lower tax collections, rising pension costs, and the need to pay for essential services are challenges for several states. Many states facing budget strain before the start of the pandemic are facing even greater fiscal problems now.