Claims for Unemployment Benefits Hit an All-Time High

The United States set some records last week.

First, we became the epicenter of the COVID-19 pandemic. Popular Science explained:

“An increase of 15,000 known cases in just one day pushed the United States past Italy and China, making it the new epicenter of the pandemic…Experts suspect the actual number of U.S. cases is much higher than currently reported…the United States has tested a far lower percentage of its large population than other hard-hit countries.”

On Friday, March 27, the Centers for Disease Control (CDC) reported there were 103,321 confirmed cases and 1,668 deaths in the United States.

Second, as businesses across the country closed, leaving many workers without income, first-time claims for unemployment benefits hit an all-time high of 3.3 million. The previous record of 695,000 was set in 1982, during one of the deepest recessions the United States had experienced to date.

Third, Congress passed the biggest aid package in history. The $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES) was signed into law last week. The CARES Act authorizes financial support for workers and businesses, including:

Relief checks. If you earn less than $75,000, and file taxes singly, you can expect a one-time payment of $1,200. If you’re married, you and your spouse will each receive a check. Children will receive $500 each. Social Security benefit recipients will receive checks, too.

Higher unemployment benefits. CARES raised unemployment benefits by $600 a week for four months.

Tax credits for businesses that keep paying employees. Businesses of all sizes are eligible for a tax credit intended to keep workers on the payroll. The credit is up “to 50 percent of payroll on the first $10,000 of compensation, including health benefits, for each employee,” reported NPR.

U.S. stock markets rallied on the news. Some speculated the shortest bear market in history had ended, but Randall Forsyth of Barron’s cautioned, “To anybody who has been around for a market cycle or more, that pop was the very essence of a bear-market rally, and such rallies are the most violent.”

Major U.S. indices moved higher during the week.

Best regards,

Womack Investment Advisers, Inc.

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