The numbers: The collapse of the U.S. economy because of COVID-19 is becoming more evident by the day, the latest sign a record 6.7% decline in the leading economic indicators in March.
The closely followed index, published by the U.S. Conference Board, measuring the nation’s economic health tracks 10 indicators, most of which showed sharp deterioration last month. New jobless claims posted a record surge, for instance, and stock prices plummeted.
The steep drop in the 60-year-old index shattered the prior record of a 3.4% decline in October 2008, when a financial panic plunged the U.S. into its deepest recession since World War Two.
The decline is all but certain to be even worse in April — probably a lot worse. The economy only started shutting down in the second half of March as the states and federal government ramped up efforts to slow the spread of the coronavirus.
“Recession, if you hadn’t guessed,” noted Scott Brown, chief economist at Raymond James.
What happened: The leading economic index showed deterioration in the economy across the board, the Conference Board said Friday.
The board has predicted the economy will shrink by as much as 7% in 2020 in light of all the damage caused by the viral outbreak and frantic efforts to contain it. Already a record 20 million American have applied for unemployment benefits.
Big picture: The U.S. economy is hurting badly, as is the rest of the world, and a global recession is already here. How long it last and how much worse it gets depends on whether nations succeed in slowing the spread of the virus.
President Trump on Thursday offered guidelines on how the economy can reopen, but it’s going to months if not longer before things start to show any semblance of normality.
What they are saying? “The unprecedented and sudden deterioration was broad based, with the largest negative contributions coming from initial claims for unemployment insurance and stock prices,” said Ataman Ozyildirim, senior director of economic research at the board. “the sharp drop in the LEI reflects the sudden halting in business activity as a result of the global pandemic and suggests the U.S. economy will be facing a very deep contraction.”
Market reaction:The Dow Jones Industrial Average
and S&P 500
rose in Friday trades after reports that a drug in trial to treat COVID-19 has shown some positive results. Read:Dow rises as investors pin hope on Gilead coronavirus treatment and U.S. reopening.
The 10-year Treasury yield
slipped to 0.62%.