So much to talk about, so little time.  What to discuss next?  As predicted, the weekly new claims for unemployment showed the devastating impact on the labor market with nearly 3.3 million people filing new claims for unemployment.  Here's an interesting map that shows the changes by state:

Unfortunately, it looks like there's room for many more claims in the coming weeks (e.g., only 1% of the California labor force filed new claims for unemployment?).  This is just the first snapshot of what's going on in the job market.  Unfortunately, it's going to deteriorate in the coming weeks.

Let's switch to some better news.  Previous posts noted that historic increases in risk premiums in financial markets.  Those have improved somewhat this week, due largely to the actions of the Fed.  Here's an updated chart for the AAA risk premium (declining from just over 3% to under 2.5% on Wed, Mar 25); note - preliminary research suggests that the recent spread between the yield on the average AAA-rated bonds and the US Treasury bond even exceeded that of the early 1930s.

More evidence of reduced systemic risk is the decline in the real interest rate as estimated in the TIPS market (see previous post for further background).

The two charts shown above indicate that the severe stress on financial markets has eased somewhat (helps to explain the strong rebound in the stock market in recent days).  The good news is the potential breakdown of the financial system has been stabilized, but it's not close to being over yet.