The Week in Review: October 19, 2020
Mixed Economic Data Paints Mixed Picture
Over time, economic reports tend to move in the same direction. If the economy is expanding, the news is good. In a recession, the opposite occurs. However, over a short period, we may get one piece of good news and one piece of unsettling news. That’s what happened last week.
Let’s start with the good news. Retail sales jumped 1.9% in September, easily exceeding the consensus forecast of 0.7% (Econoday/U.S. Census). Remove auto sales, which surged by 3.6%, and sales were up a healthy 1.5%.
We are seeing pockets of strength in the economy. They are exhibited in the retail sales data. It’s encouraging—but will it last?
Consumers have money from past stimulus bills, which is helping to fuel spending. Yet barriers remain in some sectors, including travel, airlines, hotels, sports, and other arena events. Most of these categories are outside of the retail sales classification.
Block the transmission mechanism for some parts of the economy, and consumers are funneling cash into other sectors, despite still-high unemployment.
Nonetheless, while spending is healthy, layoffs ticked higher last week, as first-time claims for unemployment insurance unexpectedly rose.
The illustration below compares first-time claims during the 2007-09 recession with the current recession. Millions are returning to work every month, but millions are also grappling with layoffs every month. And weekly layoffs remain above the peak in the Great Recession.
Bottom line, the economy has made remarkable progress since April. But most reports illustrate that a full recovery has yet to take place.
If you have any questions or concerns, feel free to reach out to me, Will, or Tyler.
Two for the Road
In August, the value of the top five companies in the SP 500—Apple, Microsoft, Amazon, Facebook, and Alphabet—was 9% greater than the total market cap of the bottom 300 companies in the index. —Axios, February 7, 2020
Audiences watched 7.46 billion hours of live-streamed content in Q3. To put that into perspective, there are 876,000 hours in a century. That means roughly 8,447 centuries of content was consumed across all streaming platforms in just three months. —Morning Brew, October 7, 2020.
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