The service industry will be one of the hardest hit by the economic slowdown being caused by the COVID-19 coronavirus. Almost 50% of states have now closed (or restricted) bars and restaurants, while others have imposed curfews and have closed non-essential businesses. In most large cities, hospitality workers make up more than 10% of the total workforce, with New York leading the way with more than 1,000,000. Miami will also be hard hit as the industry supports 14% of its working population.
The jump in jobless claims reported this week, to 281K from 211K, is nothing compared to what’s coming next week. The cut-off date for yesterday’s report was last Saturday, so the pick-up in closures, furloughs, and layoffs at restaurants, bars, and other consumer-related establishments will appear in the data for the week ending tomorrow. We have tried to piece together accurate numbers, but this remains a fluid situation hence hard to predict. Being said, the magnitude of the increase in the number of claims in recent days, compared to the previous week, seems to be about tenfold. Southern states have reported fewer cases of the virus, and it is hard to gauge the effect that will have on numbers. On the other hand, California alone has reported over 200k in the past four days (according to the governor).
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