• Man on the moon

    Soundtrack 2 my life  Consumer spending increased 8.2% for May, which is the first increase in consumer spending since COVID-19 made its appearance. Even though an 8% increase is good, it falls about 2% short of economists’ expectations. Many retailers are dropping prices to bring in sales volume, which has caused inflation to fall to 1%, well below the Fed’s 2% target. While spending increased meaningfully, incomes are under pressure and fell 4.2% last month given the continued job losses we’ve been seeing (another 1.5m new jobless claims were filed last week).  Moral of the story: The end of government stimulus and the resurgence in COVID-19 cases are probably going to cap any more…

  • Gusto

    Shopping for summer styles  Retail sales came back bigly in May once shops around the country began reopening, increasing a record 17.7% for the month. Sales jumped (like Hulk style jumped) 188% at clothing stores, 90% at home-furnishing stores, 29% at bars and restaurants, and 44% for autos.  Moral of the story: While retail sales far outpaced expectations in May, the number still came in 6% lower than last year. Plus, remember all those people who are getting paid more today on unemployment than they were while they wore working? I actually found the numbers behind this – 63% of US workers are earning more under unemployment. They had some extra cash to spend.…

  • Disconnected from reality

    The bleeding continues  New jobless claims for the first week of June came in at 2.24m (including federal and state claims). New jobless claims have decreased meaningfully from the peak weekly rate in April but are still alarmingly high, indicating the bleed from the COVID-19 crisis continues. However, more people are returning to work as continuing claims have fallen to 18.9m, almost 4m lower than the peak a few weeks ago.  Moral of the story: Officially, over 47m new jobless claims have been filed during the course of this pandemic. Unofficially, employment data, while directionally correct, probably isn’t factually accurate. Many states have experienced significant technical difficulties as their unemployment…

  • History in the making

    Slowly returning  As states have started reopening, economic activity has returned effectively across the board. The ISM Manufacturing Index increased slightly to 43.1% in May, from its 11-year low of 41.5% in April. The services side of the economy climbed back a bit stronger, coming in at 45.4% in May, after falling to 41.8% in April.  Moral of the story: Readings of ISM indices below 50% indicate contractionary environments, so no doubt we’re still in a tough spot, but an economic recovery is under way. Whether we can continue to snap back at healthy levels is yet to be seen. Whether we are impacted by a second wave of COVID-19 outbreaks is yet to…