The Week in Review: October 5, 2020
Pace of Job Growth Slows; Trump Tests Positive for COVID
Employers are bringing back furloughed workers. But the initial surge of reopenings, which sharply boosted employment in the summer, is fading. The low-hanging fruit has been picked.
Nonfarm payrolls rose 661,000 in September versus 1.50 million in August. Payroll growth peaked in June and has slowed over the last three months. Since bottoming in April at 130.3 million, employment has regained 52% of its pre-COVID peak of 152.5 million (U.S. Bureau of Labor Statistics).
Government jobs fell last month, primarily in education. Big increases occurred in retail and leisure/hospitality, some of the worst-hit sectors in the crisis.
Meanwhile, the unemployment rate fell from 8.4% in August to 7.9% in September, according to the U.S. BLS.
While the jobless rate doesn’t fully capture the damage to the labor market, the decline from the peak of 14.7% is encouraging. Still, first-time claims for unemployment insurance (Dept. of Labor) remain elevated, as business uncertainty persists.
Bottom line—the economy continues to expand, but we are seeing a moderation from the fast pace experienced over summer. Congress and the White House continue to haggle over the finer points of a stimulus package but have yet to hammer out a deal. Despite the expected price tag, the slowing pace of employment growth could increase pressure to compromise.
Trump, First Lady Test Positive for COVID
Early Friday morning, many of us woke to the news that President Trump and the first lady tested positive for COVID-19. The news initially rattled investors. The market managed to pare losses by the close, but the situation remains fluid.
We’re in the middle of what is the most contentious election we have ever seen. Further, no candidate has ever been diagnosed with a serious disease this close to election day. Given that we are in uncharted territory, many scenarios regarding the election could play out. How it unfolds may have unforeseen consequences for either side.
Bottom line—the diagnosis adds another layer of uncertainty to an already tentative situation. As we’ve seen before, investors usually shy away from stocks when uncertainty rises. Longer term, it is the economic fundamentals and Fed policy that drive stocks.
If you have any questions or concerns, feel free to reach out to me, Will, or Tyler.
Two for the Road
In August, it only took 22 days to sell a home in America, matching the fastest rate on record. —CNBC, September 22, 2020
Since 1972, the stock market has rallied from Election Day (or shortly thereafter) until the end of the year on 10 of 12 past such occasions, with an average gain of 7.2%. —MarketWatch, August 18, 2020
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