US stock markets have crashed today with the Dow Jones Index down 1.6 percent as of 11 a.m. ET. Two key economic indicators were released today. The U.S. second-quarter GDP fell 32.9 percent, according to the first reading from the Department of Commerce. While the amount is the worst quarterly fall on record, it is still better than the 34.7 percent fall that economists surveyed by Dow Jones expected. The jobless claims came in at 1.43 million.
The Fed’s record easing and the government’s $3 trillion stimulus helped propel U.S. stock markets. However, economic data shows the coronavirus pandemic's deep financial impact. The Conference Board expects the U.S. GDP to fall 7 percent in 2020. In the June update, the IMF said that it expects the global GDP to fall 4.9 percent in 2020. The IMF expects the U.S. GDP to fall 8 percent in 2020.
Before the pandemic, President Donald Trump used to tweet about the strong U.S. economy and booming stock markets. In February, President Trump said that the U.S. economy was 'the best ever.' However, President Trump has not tweeted much about the economy since the coronavirus pandemic started. So far, U.S. stock markets have bounced back despite the economic fallout amid the coronavirus pandemic. The Nasdaq 100 Index and the S&P 500 recouped their 2020 losses. The Nasdaq 100 even surged to record highs due to strong gains in tech stocks like Amazon.
U.S. jobless claims keep rising
According to U.S. jobless claims data released today, 1.43 million Americans filed claims last week. Jobless claims have been above one million for 19 consecutive weeks. Over 54 million Americans have filed for jobless claims since the coronavirus pandemic started. While U.S. jobless claims peaked at 6.9 million in the last week of March, they have been stagnant near 1.5 million for the past eight weeks.
In what looks like another troubling development, jobless claims have risen sequentially for two weeks. Previously, the claims fell sequentially for 15 consecutive weeks. Continuing claims represent individuals who have already filed for claims in the previous weeks and continue to file for jobless claims. The continuing claims were 17.018 million last week compared to 867,000 from the previous week.
The pandemic has taken a toll on the consumption-driven U.S. economy. After the $3 trillion stimulus, lawmakers are contemplating another $1 trillion stimulus. While the stimulus helped support the economic activity, it came with a cost. The U.S. fiscal deficit in 2020 will likely climb to the highest level since World War II. Even Warren Buffett, Berkshire Hathaway's chairman, cautioned against the unprecedented easing.
Meanwhile, daily coronavirus infections in the U.S. continue to hover near record highs. Last week, 18 states reported a daily record in new cases. A surge in coronavirus infections has prompted states like Texas to slow down their reopening plans. A delayed reopening would also pressure the U.S. GDP in the third quarter.