New kid on the block New unemployment claims increased 847k last week, coming in well below expectations for 875k, but this remains significantly higher than the 100k-200k range we were seeing pre-COVID. The total number of Americans receiving some form of unemployment benefits increased 2.29m to 18.28m (most of that’s related to people rolling onto the unemployment funds included in the stimulus package passed in December).  Moral of the story: Unemployment continues to be an issue as government-mandated shutdowns keep fluctuating in different parts of the country. In positive news, Johnson & Johnson announced a successful single-shot vaccine (vs Moderna and Pfizer’s double shots). The US Government is expected to…

Orders from DC  Upon his inauguration, President Biden signed 10 executive orders specifically to combat the pandemic. His plans include the intent to use the Defense Production Act (also enacted by the Trump administration for the production of ventilators and other supplies) to produce protective equipment and supplies for testing and vaccinations. The new administration is going to look to accelerate the roll-out of vaccines (100m doses in his first 100 days) by providing more funding for state and local officials and mobilizing FEMA resources to make it happen.  Moral of the story: It’s abundantly clear the real economic recovery is going to happen in lockstep with our ability to…

Finding silver linings  New unemployment claims last week spiked to 965k (vs the 800k expected). This is the highest weekly number since August last year. Continuing claims, which is more indicative of the longer-term unemployment trend, also increased, for the first time since November. The increase in jobless claims was most acute in states with strict government shutdowns like California, where even outdoor dining is now prohibited.  Moral of the story: The December jobs report, combined with the weekly unemployment updates we’ve gotten so far in January, are clearly indicative of a struggling labor market. The one silver lining to this data is that it’s likely to generate bipartisan support…

The Frog Prince Contrary to most other economic indicators, the manufacturing sector grew at the fastest pace since the beginning of the pandemic last spring (we’re about to lap a full year around the sun with this nonsense…). The ISM manufacturing index increased to 60.7 in December (anything above 50 indicates growth) and this is actually the highest level we’ve seen in almost two and a half years. Most encouraging, the employment piece of the index, which had been negative for 14 months straight, rose above 50 for the first time in October and again in December as well.  Moral of the story: This index basically measures whether things are getting better or…

Crawling to the finish line Consumer spending fell in November, which is the first decline in this economic data point since April. Consumer spending fell 0.4% and personal incomes decreased 1.1%, indicative of the pandemic-related relief winding down. Inflation, as measured by the Fed’s preferred PCE index, was flat for the month. The core PCE index, which excludes food and energy, was only 1.4% higher on an annual basis, well below the Fed’s 2% inflation target.  Moral of the story: Consumption accounts for the majority of the US economy and what we’ve seen so far is telling us that the economy basically crawled to the finish line of 2020 (same,…