• The other shoe is dropping

    False positive New jobless claims came in slightly above 1.3m for last week. Even though this is the lowest reading in four months, it’s still insanely high compared to the numbers pre-COVID. It’s also probably understating reality because the July 4th holiday weekend meant people had one less day to file claims. Continuing claims, which is a better barometer for unemployment, came in at 32.9m last week when including all the additional state and federal unemployment claims. That number is, unfortunately, 1.4m higher than the week before.  Moral of the story: Shutdown 2.0 across many states is flowing through into the unemployment picture as Texas, Florida, and Georgia saw some of the highest…

  • HBD USA

    Taking a break from our regularly scheduled activities to be mindful about what this holiday weekend represents. I came across a great tweet from Tim Cook reminding me “our work as a country is not finished until every American shares fully in the promise of the Declaration of Independence.” In case you need a quick refresher from your US History class (as I did), here’s the excerpt from the Declaration of Independence we all need to remember and strive to achieve every day –   We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that…

  • Man on the moon

    Soundtrack 2 my life  Consumer spending increased 8.2% for May, which is the first increase in consumer spending since COVID-19 made its appearance. Even though an 8% increase is good, it falls about 2% short of economists’ expectations. Many retailers are dropping prices to bring in sales volume, which has caused inflation to fall to 1%, well below the Fed’s 2% target. While spending increased meaningfully, incomes are under pressure and fell 4.2% last month given the continued job losses we’ve been seeing (another 1.5m new jobless claims were filed last week).  Moral of the story: The end of government stimulus and the resurgence in COVID-19 cases are probably going to cap any more…

  • Gusto

    Shopping for summer styles  Retail sales came back bigly in May once shops around the country began reopening, increasing a record 17.7% for the month. Sales jumped (like Hulk style jumped) 188% at clothing stores, 90% at home-furnishing stores, 29% at bars and restaurants, and 44% for autos.  Moral of the story: While retail sales far outpaced expectations in May, the number still came in 6% lower than last year. Plus, remember all those people who are getting paid more today on unemployment than they were while they wore working? I actually found the numbers behind this – 63% of US workers are earning more under unemployment. They had some extra cash to spend.…

  • Disconnected from reality

    The bleeding continues  New jobless claims for the first week of June came in at 2.24m (including federal and state claims). New jobless claims have decreased meaningfully from the peak weekly rate in April but are still alarmingly high, indicating the bleed from the COVID-19 crisis continues. However, more people are returning to work as continuing claims have fallen to 18.9m, almost 4m lower than the peak a few weeks ago.  Moral of the story: Officially, over 47m new jobless claims have been filed during the course of this pandemic. Unofficially, employment data, while directionally correct, probably isn’t factually accurate. Many states have experienced significant technical difficulties as their unemployment…

  • History in the making

    Slowly returning  As states have started reopening, economic activity has returned effectively across the board. The ISM Manufacturing Index increased slightly to 43.1% in May, from its 11-year low of 41.5% in April. The services side of the economy climbed back a bit stronger, coming in at 45.4% in May, after falling to 41.8% in April.  Moral of the story: Readings of ISM indices below 50% indicate contractionary environments, so no doubt we’re still in a tough spot, but an economic recovery is under way. Whether we can continue to snap back at healthy levels is yet to be seen. Whether we are impacted by a second wave of COVID-19 outbreaks is yet to…

  • The Right Side of Change

    Ten weeks straight This week’s jobless claims data marks the 10th week in a row of new jobless claims over 2m. The total number of people applying for unemployment at one point or another through this crisis totals about 48m now, which is honestly unfathomable to me. Importantly, the continuing claims number fell 3.86m from the prior week, indicating those people have either returned to their jobs or found other employment. While down sharply, continuing claims are still at an insane 21m. Moral of the story: As the economy is starting to open up across the country, people are returning to jobs, especially in the hospitality and retail sectors, which account…

  • Hello, summer

    Fed Speak This week’s Fed speak actually started on Sunday evening when Fed Chairman Jerome Powell made an appearance on 60 Minutes. The message from Powell during the interview was fairly simple – the Fed hasn’t exhausted its arsenal to help the economy get through this crisis and there’s “no limit” to what the Fed will do to lend money to the markets. While he cautioned about the high levels of debt because of all the fiscal and monetary stimulus being pumped into the economy, he also stressed that stopping spending could risk to long-term damage to the productive capacity of the economy.  Moral of the story: The biggest concern for…

  • Message in a bottle

    Hopefully beginning of the end Another 2.6m people filed for unemployment during the first week in May, bringing the total to 39m. It’s important to note not all of these people are still out of work – some have been called back in essential industries while others are returning to work in states that are starting to reopen.  Moral of the story: The weekly initial jobless claims are coming down from the 6.9m weekly high we saw a few weeks ago, but we’ve seen claims above 2m for 8 weeks straight. This compares to the ~200k range we were seeing prior to COVID-19. It does seem like things are starting to bottom…

  • Twenty. Point. Five. Million.

    The “report from hell”  The dreaded April jobs report came across the wire this week and it’s the worst report seen by industry leaders that have been in this business for decades. The official unemployment number for April came in at 14.7%, which is the highest since the 1930s, and reflects 20.5m lost jobs in one month. Effectively every industry across the board was impacted, even healthcare, which lost 1.5m jobs in the midst of the worst health crisis in US history. If furloughed Americans are included in the number, that unemployment actually jumps to 19.7%. This is the type of stuff they’ll be writing about in the finance and economics…