• Ups & Downs

    Our new friend, volatility Two major stock indices – the S&P 500 and Dow Jones Industrial Average – closed lower for the fourth straight week after a good bit of volatility. If you remember, I had mentioned a while back that the stock market seemed overpriced, especially given the fact that we’re still in the middle of a pandemic. That, plus uncertainty about the election, rising COVID-19 cases, and declining hope for any additional federal stimulus this year all added layers of risk for investors to parse through.  Moral of the story: I think the market is going to basically be in this same type of holding pattern for the foreseeable future.…

  • RIP RBG

    Nobody’s shopping for a new fall wardrobe  Retail sales increased for the third straight month in August but the momentum of recovery definitely seems to be losing steam. Sales increased 0.6% overall with spending at bars and restaurants seeing a sizeable boost – up 4.7% in the month. Even though sales have been improving in many categories, sales at restaurants are still down about 15% compared to last year and sales at clothing stores are down 20% compared to last year. All summer I think I maybe wore 6 real people outfits. Moral of the story: Retail sales are a major component of consumer spending, which accounts for about 2/3 of…

  • Just keep swimming

    Taking a wrong turn  In an unfortunate turn of events, it seems like the labor market recovery has halted and even slightly reversed. Last week, new unemployment claims increased for the fourth week in a row. New jobless claims under the state and federal programs increased to 1.69m last week from 1.59m the week before. More concerningly, continuing claims also increased slightly to 13.4m, which was the first time this measure has increased in the last five weeks.  Moral of the story: This could be driven by the return of federal unemployment benefits ($300/wk by executive order) or could be indicative of a new wave of layoffs as businesses try…

  • Goodbye summer, hello fall

    The last official week of summer  Economic data was pretty scarce during this last official week of summer and the only meaningful piece of information received was the August jobs report. The US created 1.4m jobs in August and the unemployment rate fell to 8.4% (from 10.4% in July), marking the fourth straight decline in unemployment since the peak of 14.7% a few months ago.  Moral of the story: This jobs report exceeded expectations, especially given the concerns from rising COVID-19 cases over the summer reversing reopening across several states. Even though there’s some recovery across many industries, we’re still seeing ~800k new jobless claims every week. Industries related to…

  • What Happens in Jackson Hole…

    Faltering confidence Consumer confidence fell in August to a new pandemic low after the increase in COVID-19 cases throughout the summer increased pessimism about an economic recovery. The index that reads consumers’ feelings about the economy right now fell from 95.9 in July to 84.2 in August. The index that reads consumers’ feelings about the economy six months from now fell from 88.9 in July to 85.2 in August – not nearly as steep of a fall but still a new pandemic low.  Moral of the story: Americans have somewhat figured out how to live in the midst of COVID-19 – people are returning to restaurants and movie theaters –…

  • Accidentally Active

    The haves and have-nots  The government-mandated shutdowns throughout the spring and early summer had a very pronounced impact on retailers – those who were deemed essential and permitted to keep their doors open lived through a much different COVID-19 experience than those who were forced to close. This was abundantly clear as retailer earnings rolled through this week (idk how it’s still earnings season). Walmart sales increased 9.3% and ecommerce sales increased 97%. Target’s same-store sales (sales at stores that have been open for at least a year) increased 24.3% and ecommerce sales tripled. Home Depot’s same-store sales increased 25%. Sales for Ross, however, fell 32.5%. You get the picture.  Moral of the story:…

  • Recess time is non-negotiable

    Coincidences  New weekly jobless claims fell below 1m last week for the first time in almost five months (let’s take a moment to recognize it takes less time to learn a coding language than it has taken for us to learn how to wear masks and listen to medical experts). Remember how jobless claims were somewhat plateauing for almost 9-10 weeks? This is the second week of large declines in jobless claims. It almost coincidentally lines up with when the $600/week federal unemployment benefits ran out.  Moral of the story: The decrease in claims is probably a combination of two things – the economy reopening and the expiration of federal unemployment benefits that likely…

  • You Can’t Do That

    Second wave impacts  We added 1.76 new jobs in July, which is about a third of the jobs that were gained in June. This checks out given rising COVID-19 cases toward the end of June caused much of the country to shut down again. Restaurants and retailers added the most jobs in July, but at a much slower pace than in June. These two sectors were the hardest hit due to government-mandated shutdowns and accounted for over 8m of the total job losses. As of July, only about half of those jobs have come back.   Moral of the story: In aggregate, we lost over 22m jobs during the peak…

  • BRB, recasting all my y-axes

    A Truly **Gross** Domestic Product  Second quarter GDP literally plummeted into the depths of the deepest oceans. Down by an unprecedented 32.9% for the quarter, last quarter’s GDP marked a new record. To put this into perspective quarterly GDP never fell more than 10% in previous recessions. COVID-19 has resulted in y-axes in literally all economic charts to be recast, and it’s a real first-world problem. Consumer spending fell by 34.6% – it was most pronounced in services spending (travel, tourism, restaurants, bars, etc.) where consumption fell 43.5% while spending on goods only declined 11.3% as Americans bought more cars, groceries, and electronics to facilitate working from home. Federal spending was the only piece…

  • Day 141 of Quarantine and Counting

    Searching for silver linings  There wasn’t much new economic data this week, but we got our usual (un)friendly reminder about our dire employment situation. Seasonally adjusted new jobless claims increasedlast week. Silver lining – auto plants typically shut down for holidays in July but that’s not happening this year, so the seasonal adjustment meant to normalize for this is making the seasonally adjusted numbers complete garbage. Unadjusted new jobless claims actually fell 142k to 1.37m. I feel like we’ve gotten so desensitized to seeing these weekly job losses in millions that it’s worth the reminder that the highest weekly number we’ve seen before COVID-19 was 695k in 1982. Four months into this…

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