COVID-19 Shutdowns Spike 4 Million Layoffs

Last week 3.3 million workers applied for unemployment insurance. In addition to being an all-time record, it exceeded the projections of many economists who were expecting just 2 million.

Combining last week’s applications with the prior week’s numbers of 695,000, the total number of applications for this two-week period hit a surreal level of over 4 million unemployment applications.

Up until that point, the highest number of weekly unemployment applications was reported in March 2009, which hit 665,000 claims.

Goldman Sachs, the investment bank, which is usually a very aggressive forecaster, indicated last week that they thought the number would only be in the neighborhood of 2 million applications.

Not all of these jobs represent jobs that have been permanently eliminated. Many of these positions have been furloughed. We will have to wait until the COVID-19 protocols are no longer being enforced to know for sure the permanent damage done by the outbreak.

The $2 trillion stimulus bill that is currently being negotiated in Congress will give an additional $600 per week for 4 months to such workers who were furloughed due to the coronavirus epidemic.

Within certain industries, such as the real estate industry, open house viewings have slowed significantly, causing many agents to provide virtual tours for those individuals who are still in the market for a home.

Fortunately for home sellers, the inventory shortage represents a factor that will insulate, to some degree, the prices at which homes are listed. Inventories, in general across the country, range between 3 to 4 months supply. In Essex County, New Jersey, the supply has fallen dramatically to 2.8 months supply.

In addition, interest rates for home mortgages are also near historic lows and individuals have been applying to get pre-approved for these low-cost loans for the last several weeks. We will have to see how March numbers play out and if it affects the average median price.