Coronavirus chaos moving from markets to economy

The past couple of weeks have been dominated by the financial market impact of the coronavirus pandemic, with equity markets continuing to plummet, the dollar surging and signs of strain persisting in money markets, despite the Fed’s interventions. The next couple of weeks will provide clearer evidence of the economic impact. We already know from high-frequency data that traffic congestion, hotel occupancy and restaurant dining are down sharply from normal levels, but the potentially bigger news is that coronavirus containment measures are starting to have a dramatic impact on the labour market. Reports suggest that jobless claims in a number of states have already skyrocketed as workers in the retail, leisure and transport sectors have been laid off. Assuming a similar pattern nationwide, we could be looking at an unprecedented jump in initial jobless claims from current levels of just over 200,000 to well over one million within the next few weeks. In that environment, the clock is rapidly ticking for Congress to provide substantial fiscal support.