As the COVID-19 outbreak tears through markets and the economy, all eyes will be on initial jobless claims data Thursday morning for clues on how the pandemic has impacted the U.S. labor market.
Despite all of the previous headwinds facing it, the U.S. labor market remained solid until the coronavirus outbreak put it to the ultimate test. And some early indications point to bad news ahead.
In a note to clients March 17, Bespoke Investment Group outlined some key reasons why it is worried about the labor market. First, people searching “unemployment benefits” in Google Search have exploded. “Assuming a linear relationship to claims as has historically been the case, those would be consistent with more than 800,000 claims in the current week,” the firm said.
In addition, data from Ohio Senator Robert Portman’s office cited 6,500 new claims last week but more than 40,000 this week. While Ohio’s numbers don’t necessarily represent the entire country’s trends, Bespoke warned that the number of Americans filing for unemployment benefits is likely to be higher than normal. Economists surveyed by Bloomberg are expecting initial jobless claims for the week ended March 14 to total 220,000 from 211,000 in the prior week.
As countless industries get hammered by COVID-19, restaurants have been one of the worst hit. Investors will get a peek into how the large chains are faring during difficult times when Olive Garden parent company Darden Restaurants (DRI) reports earnings ahead of the market open.
Darden is expected to report adjusted earnings of $1.88 per share on $2.32 billion in revenue during its fiscal third quarter. Of the 15 largest restaurant chains, Darden’s stock has been the worst performing during the coronavirus crisis, according to S&P Global Market Intelligence. Shares have plunged a whopping 59% in the month ended March 16.
America’s restaurant industry employs about 15.6 million people and is the second-largest private employer in the country. However, the coronavirus pandemic has brought the entire industry to its knees in recent weeks. Large chains and independent businesses have all had to take drastic operational measures in response to the rapid spread of the virus.
All of these challenges have forced the National Restaurant Association (NRA) to seek government aid. The restaurant lobbying group estimated that the restaurant industry in the U.S. will take about a $225 billion hit over the next three months which would lead to five to seven million lost jobs. Tuesday morning, the NRA sent a letter to President Donald Trump asking the Department of Treasury to create a $145 billion Restaurant and Foodservice Industry Recovery Fund.
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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