1) Again, there is additional unemployment this week with 2.4 million people filing for unemployment benefits this last week. This brings the total U.S. unemployment during the pandemic up to 38 million, with continuing claims at 25.07 million, the highest level on record. The good news is the filings continue to decline from previous weeks. So far, there’s no indications that the easing of the lockdowns is having any effect on the unemployment dilemma.
2) The apparel retailer chain ‘The Gap’ is accelerating its implementation of robots in warehouses to assemble online orders, thus avoiding the use of human contact during the pandemic. The Gap is tripling the number of item picking robots in use to 106 by the fall. With the pandemic forcing the closure of its stores nationwide, their online sales shot up just when social distancing rules reduced their staff. Each robot does the work of four humans in a warehoused that was already highly automated. This is an example of increased automation occurring during times of economic shock, leaving fewer jobs for when the economy improves. These are times when employers shed less skilled workers by replacing them with technology and higher skilled workers thereby reducing their labor cost.
3) The second crisis for the American economy is arriving. The pandemic is having sever consequence for state and local governments with lockdowns eviscerating their finances. Monies needed to pay for public services and infrastructure have withered leaving governments to do triage of the services they provide. Basic services such as police, fire fighting, health, trash and water/sewer services are threatened with curtailment for lack of monies to pay salaries and supplies such as gasoline. Such actions is politically dangerous which can fuel political extremism that threatens democracy. Losses of state and local revenues are estimated to be 15 to 45 percent, or an overall loss of $1.75 trillion dollars a year. With growing doubts of re-employment after the crisis passes, this economic crisis is long term.
4) Stock market closings for – 21 MAY 20:
Dow 24,474.12 down 101.78
Nasdaq 9,284.88 down 90.90
S&P 500 2,948.51 down 23.10
10 Year Yield: down at 0.68%
Oil: up at $33.82