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 pace and the upcoming weeks will be important to watch to understand whether this is indicative of a broader trend or a blip in the data.
Housing market booming
The leading economic index increased again for September, but as we’ve seen broadly across economic data, it showed signs of slowing. The index is comprised of ten different indicators meant to signal business-cycles, and most of those indicators seem to be weakening. The biggest contributors to the small increase in the index for September came from the declining jobless claims and higher homebuilder activity.
Moral of the story: It makes sense for growth to start slowing after the pronounced recovery we saw earlier this summer. Unfortunately, without additional stimulus from Washington, economic growth is likely to be significantly lower through the final months of 2020 (isn’t it crazy we’re almost at the end of the year…?).
The beginning of the end of oil
The second presidential debate happened concurrently with the Eagles-Giants game. Both gave me heartburn, though I’d be hard-pressed to choose which was worse. Anyway, the only real incremental piece of information was Biden mentioning his desire to phase out oil. While it makes sense to phase out our dependence on an extractive, nonrenewable resource, it probably wasn’t the best strategy to talk about this right before the election. PA, with its large fracking industry, is a meaningful swing state. Biden has been losing his lead in PA slightly (still leading by over 5%) over the last couple weeks and this could tighten the race further.
Moral of the story: It does seem most political pundits are giving the W to Trump this week. Unfortunately, about 49m people had already cast their vote before the debate. To put that number into context, only about 129m people voted in the 2016 election. Trump’s victory this week is also likely to curb his enthusiasm about passing another round of stimulus before the election.