Weekly Breadline

The Producer Price Index for final demand increased 1.3 percent in January, seasonally adjusted, the largest single month increase since the index began in December 2009.  Meanwhile, import prices rose by 1.4 percent and export prices by 2.5 percent.  These increases were all well above expectations and counter the narrative that there is no inflation.

The CPI increased 0.3 percent in January, with inflation over the past 12 months coming in at 1.4 percent.  Most of the monthly increase in prices was due to higher energy costs.  Currently, inflation numbers measure post-COVID against pre-COVID.  This will end in March and headline year over year inflation should begin to jump.

According to the Labor Department, non-farm business productivity plummeted by 4.9 percent in the 4th quarter and manufacturing productivity was up by 3.0 percent, so the declines in the service sector were sizable. Productivity tends to spike as an economy comes out of recession, so these numbers are not suggestive that a recovery is afoot.

According to the Federal Housing Finance Agency, home prices in the US are up by 11.0 percent over the 12 months through November, compared to just 5.3 percent in the prior year.  The strongest markets are in the mountain states where prices are up 14.0 percent.  Prices are 37.6 percent higher than the last peak […]

The Philadelphia Fed’s Manufacturing Business Outlook Survey suggested continued expansion for the region’s manufacturing sector in January. The diffusion index for current activity increased from a revised reading of 9.1 in December to 26.5 in January.  Indicators for general activity, new orders, shipments, and employment remained positive and were stronger in January.

The Bureau of Labor Statistics reported that the Consumer Price Index rose by 0.4 percent in December, for an annualized inflation rate of 1.4 percent.  The CPI has been held down through 2020 not only by the lack of demand due to COVID-19, but also because of substantially reduced energy prices.

The monthly Jobs Report for December was released last week, and the statistics were disturbing. According to the BLS, nonfarm payroll employment declined by 140,000 in December, with the hospitality industry losing nearly half a million jobs.

Initial claims for unemployment fell from 806,000 to 787,000 in the last week of 2020. The 4-week moving average continued to rise, up from 819,000 to 836,500 in the final week of 2020. Total claims fell back under 20 million to 19.564 million.

Overall retail sales (including food service sales) fell by 1.1 percent in November, but are still up by 0.3 percent for 2020. This masks the effect of the downturn, as the only service sector contained in the retail sales number is food service (restaurants) where sales are up 4.0 percent MoM and 19.4 percent YoY. […]

According to the National Restaurant Association, since the COVID-19 pandemic began in March, 17 percent of restaurants (or about 110,000 establishments) have closed either permanently or long-term, and 10,000 restaurants have closed over the last three months alone. In addition, more than half a million other restaurants are in economic freefall according to the NRA.  […]

The big miss of the week on the part of economic forecasters came from the Jobs Report.  While economists had projected a reduction in hiring, they were well off the mark.  Only 245,000 new jobs were reported in November, down from 610,000 during October, and well below expectations of 469,000.

The day prior to Thanksgiving is generally when a trove of data are released. This year was no exception.  Overall, the data show a very mixed economy, not quite growing out of the recession, though not quite shrinking yet.  

Advance estimates of retail and food services sales for October 2020, were $553.3 billion, an increase of 0.3 percent from the previous month, and 5.7 percent above October 2019. Total retail sales for the quarter were up by 5.1 percent from the same period a year ago.

In the week ending November 7, seasonally adjusted initial claims for unemployment were 709,000, a decrease of 48,000 from the previous week’s revised number; however, actual claims totaled 723,105 a decrease of just 20,799 from the previous week. The number of continuing claims remains stubbornly high at 21,157,111, which compares to just 1,449,519, during the […]

We continue to see a decrease in continuing unemployment claims which fell by another 8,89 percent in the latest week reported.  However, this is mainly due to the fact that many people have reached their maximum benefit under state unemployment plans.  There are still over 21.5 million people claiming some sort of unemployment benefit.  

Consumer loans are up from last week at $1,524 billion dollars – driven primarily by an increase in credit card spending from $749.5 billion to $757.5 billion. This could be an indication of loosening of pandemic related restrictions in retail and hospitality sectors, giving people a chance at experiencing pre-pandemic activities.  It will be interesting […]

Federal Reserve banks across the country compile regular indices of manufacturing and business activity. The most recent Empire State Manufacturing Index, compiled by the New York Federal Reserve Bank, shows how the continued government-imposed shutdowns have continued to harm the state’s economy.  Rather than continuing to signal recovery, by falling only slightly from 17 to […]

The Institute for Supply Management® Purchasing Managers Index came in at 55.4 percent in September, down 0.6 percentage point from the prior month.  While the figure indicates expansion in the overall economy for the fifth month in a row, the index for New Orders Index was down by 7.4 percentage points to 60.2 percent.

The Conference Board’s Index of Consumer Confidence slayed expectations for September, rising to above neutral (101.8) for the first time since the COVID-19 closures began. Economists had been expecting an increase from 86.3 to 89.2

Sales of new homes have been on a tear since the COVID-19 outbreaks, crushing expectations in August with an increase of 4.8 percent from the prior month to a seasonally adjusted annualized rate of 1,011,000 units.  Nearly all sales (86.2 percent) have been in the southern and western portions of the country.  

Retail sales for August came in below economists’ expectations, increasing 0.6 percent from the prior month, and up just 2.6 percent above August 2019.

After falling for 7 straight weeks, crude oil inventories shot up by 1.73 million barrels, while prices fell by 2.5 percent. falling for 7 straight weeks, crude oil inventories shot up by 1.73 million barrels, while prices fell by 2.5 percent.

According to the Bureau of Labor Statistics, productivity increased by 10.1 percent in the second quarter, the fastest quarterly increase since 1971.

New home sales are at the highest levels in over a year, with new home sales up from 776,000 in June to 901,000 in July 2020 and up from 635,000 in the previous year.

Weekly initial unemployment claims surged back over the 1 million mark, rising by 135,000 to 1,106,000.

Early in the crisis, US spot prices actually exceeded the world market.  WTI spot is now back to $41.94 with Brent at $44.19 per barrel.

New claims for unemployment insurance fell for the first time in a couple weeks.

Last week, the Dow Jones Transportation Index reached its highest point since February increasing from 9,730.12 to 9,994.81.

Consumer Debt increased for the fourth week in a row, rising from $1,520.76 billion to $1,521.49 billion.

Reaching its highest point in over a year, Spot copper prices climbed last week to $2.935/lb from $2.860/lb.

Interest rates on 10-year Treasury Bonds fell last week from 0.69 to 0.62.

For the first time in months Consumer Debt rose last week from $1,511.71 billion to $1,517.13.

The number of new unemployment claims this week was its lowest since the pandemic started, however since most states are opening up their economies and businesses to marginally function again, these new unemployment claims are less likely to be the temporary layoffs that occurred in April and May and may be more permanent. The coming […]

After rising 900 points three weeks ago then dropping 800 points two weeks ago, the Dow Jones Transportation Average Index fell ever so slightly last week by 4 points. The transportation sector was one of the hardest hit by the government-imposed shutdown in response to COVID-19, so investors may be expecting a stronger recovery than […]

After increasing for 4 weeks, interest rates came crashing back down, with the Ten-Year Treasury Rate falling by 16 basis points (20 percent) last week.

For the first time since the government-imposed shutdowns began, the 4-week moving average of the number of people receiving unemployment insurance fell.

WTI Spot prices seem to be rising this month just as fast as they fell in April. This week’s spot price is almost 900 percent what it was 5 weeks ago, meaning oil prices may be the most V shaped recovery the US will see.

As the black swan of COVID-19 continues to circle around us, the oil price swan appears to be flying away.  World oil prices (Brent) are now up by 134 percent from their lows last month.  This is more a reflection of reduction in production rather than increases in demand.

The Dow Jones Transportation Average fell 6.9% last week as people continue to abstain from traveling and commuting to work. It is down 30% since mid-February, compared to just 15% for the S&P 500.  

The WTI Spot price returned to double digits last week as it rose to $15.71 per barrel. While still abysmally low, the price is finally increasing after weeks of falling. Given the uncertainty of the pandemic as well as OPEC activities, the price will likely continue to be volatile in the near future.

The calm in financial markets reversed last week, with the financial stress index up by over 50 percent.  Many large retail firms have already declared bankruptcy, and earnings expectations are down. Even at the current depressed levels, PE ratios for equities are at or above recent highs.

Growth in the number of unemployed seems to have peaked; however, over a million new claims will continue to be filed for at least the next few weeks, leading to unemployment levels that have never been experienced.