Rising costs
Economic data was about as slow to return after a long weekend as most of us. It was a short week with few updates but the market managed to slide into September with five straight down days ending Friday, so that’s been fun I guess. The biggest report of the week was the August Producer Price Index (PPI), which increased 8.3% compared to august last year, and marks the highest increase of the measure since it began in 2010. Excluding food and energy, core PPI still increased 6.3%, which is the highest annual increase since August 2014.
Moral of the story: PPI tends to be a leading indicator of what we can expect from the consumer price index as many of these price increases from the producer’s perspective get passed onto consumers. We get the August CPI read next week and it would shock 0 people if we continue to get eye-popping numbers on the consumer front as well.
Better late than never
Biden announced Thursday additional plans to tackle the spread of COVID cases we’ve seen in the last few months. All federal workers (must be vaccinated, can’t opt out and get tested regularly), large employers (with over 100 employees must either be vaccinated or be tested weekly), and healthcare staff (working at facilities receiving Medicare and Medicaid funds must be fully vaccinated) will be subject to new, much stricter, vaccine rules. Altogether, the new rules could impact as many as 100m people, which is almost two-thirds of our total workforce.
Moral of the story: Despite pumping trillions of dollars to support the economy, actions to actually combat COVID itself have been pretty miserable from the White House under Trump’s administration and pretty hesitant under the current administration. Good to see the vaccine mandates being rolled out in a more aggressive way now but this should have probably happened before we saw hospitals across the south with capacities maxed out again. I guess better late than never….
Hear me out, Tinder but for jobs
Despite the super weak August jobs report, weekly jobless claims continue to march lower. Last week’s number of 310k new jobless claims marks a new low since the pandemic. Claims might have even been lower if not for a pretty significant increase in the claims filed in Louisiana after Ida swept through and almost 250k homes and businesses still don’t have power.
Moral of the story: The big catalysts for the labor market – kids returning to school and COVID-related federal unemployment benefits running out – both happened last week, and that will show up in the unemployment data we see next week (this data runs on a one-week lag). There are 11.9m people receiving some sort of unemployment benefits right now. At the same time, job openings are sitting at a record high of 10.9m, up almost 750k from last month, as employers are struggling to fill open positions. Unfortunately, the misalignment of skills needed to skills available will make the match-matching of job openings to employed a little difficult, but there’s a ton of demand for labor out there, and hopefully the September jobs report will be indicative of that.