Part 3 -- U.S. 2020 Economic Conditions, the Pandemic, and Where We Are at the Beginning of June 2020
June 08, 2020
This is the third in a series of posts focusing on year-to-date economic conditions in light of the impact of the COVID-19 pandemic and continuing government economic recovery legislation. See the first post, second, and fourth, stay tuned… there’s more to come.
D. April 2020 and the U.S. Economy Entering May 2020
Continuing into April 2020, by month’s end the S&P 500 Index was 2,940; a year-to-date decline of 9%. The DJIA closed at 24,364 with a 4.3% gain for the year. The NASDAQ was 8,915 and essentially unchanged From January 1. These indices levels were an improvement over March 2020, however insufficient to reverse the total cumulative economic losses of the 2020 first quarter.
More important was the April 30, 2020 U.S. unemployment rate, which climbed to 14.7%, compared to 4.4% at March 31.
The April unemployment level further weakened consumer spending. For the year, the yield on 30-year Treasuries had decreased 45% to 1.28%. Ten-year Treasury bond yields were .64%, a decrease of 66% for the year. Three-month Treasury yields were 0.09%, down from 1.54% at January 2.
As April ended, the average 30-year conventional residential mortgage rate was 3.23%, a decline from the January 2 rate of 3.72%,
The U.S. unemployment rate of 14.7% in April 2020 was is the highest since 1948; however, it was lower than the market expectations of 16%, as the COVID-19 crisis caused millions to be out of work. The number of unemployed persons rose by 15.9 million to 23.1 million, while the number of the employed declined by 22.4 million to 133.4 million. The labor force participation rate decreased by 2.5% over the month to 60.25%. The unemployment rate consensus for May was 19.5%, decreasing to 15.5% in June (source tradingeconomics.com).