Change of pace  Initial jobless claims fell 55k last week to the lowest weekly number since the beginning of the pandemic. While this is good to see, part of it was driven by lower claims in California after the state had a temporary freeze in its numbers for two weeks as it worked on its backlog, updated its computer systems, and installed new fraud-detection processes. In even better news, continuing jobless claims dropped by 1m.  Moral of the story: Recovery in the employment market seemed to have stalled over the last few weeks as new unemployment claims were stuck above 800k. This week’s lower numbers are a welcome change of…

Global growth The IMF released its latest economic forecast earlier this week. While this year’s recession is expected to be less severe than their forecast released in June, they are also lowering expected global economic growth for 2021. Past that, global economic growth is expected to moderate significantly. The IMF, like central banks, also stressed the importance of fiscal support during the pandemic. Moral of the story: This recession is going to cause the incidence of extreme poverty to increase for the first time in two decades, which is a huge setback from a global humanitarian perspective. In terms of the impact on the global financial system, the IMF warned the pandemic is likely…

Getting nowhere  Fed Chairman Jerome Powell spoke to the National Association for Business Economics on Tuesday and restated the need for additional stimulus from the federal government. His argument, which is fair, is that too little support would lead to more businesses declaring bankruptcy and create additional pressure on the labor market. Too much support, on the other hand, doesn’t present as much risk (except our debt continues to pile on astronomically). So, the risk/reward balance is skewed in favor of more federal support.  Moral of the story: Despite what the Fed recommends, we’re in a political battle unlike any I remember in the recent past and unfortunately Americans are losing…

Can’t stop spending  Consumer spending increased again in the month of August but at a slower pace than the last three months. Americans dug into their savings to make this happen, because incomes fell by 2.7% in August, which is the biggest drop in incomes since the early days of the pandemic. Spending mainly increased at hotels and restaurants as Americans’ propensity to travel seems to be picking back up again and restaurants across the country are reopening for indoor dining in limited capacities. Moral of the story: Monthly consumer spending, at this point, is only about 4% lower than pre-COVID levels. It’s likely that consumer spending will continue to…