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Jobless Claims Still Coming Down... Slowly

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Thursday, October 1, 2020

New economic data has come out this Thursday morning, sandwiched between monthly jobs totals on the private-sector side from ADP (ADP - Free Report) yesterday and non-farm payrolls tomorrow, with results gradually better than they were a week ago. A total of 837K new jobless claims last week was lower than the 840-850K analysts were looking for, and down notably from the upwardly revised 873K reported for the previous week.

On Initial Jobless Claims, we’re still range-bound at a troublingly high level, with more than 3/4 of a million Americans newly finding themselves out of work. Though it’s still better than the million-plus new claims we were seeing as recently as late August, initial figures now count almost 63 million jobless claims since the mid-March start to the coronavirus pandemic in the U.S.

Continuing Claims have passed a positive threshold of sorts: beneath 12 million for the first time since the peak of the pandemic to 11.77 million, which is also lower than the upwardly revised 12.75 million from the previously reported week (a week prior to initial claims). Considering we topped out at nearly 25 million longer-term jobless claims in May of this year, we’ve come a long way. But these numbers clearly indicate we still have a long way to go from here.

Personal Income for August dipped farther than expected to -2.7%, representing the worst monthly income month since May, and well off the +0.4% pace initially reported for July. Analysts had been looking for a fall-off in federal government assistance manifesting itself in metrics such as Personal Income, and this looks to have come to pass; -2.6% was the consensus estimate, so they weren’t far off.

Consumer Spending for August came in at +1.0%, just as expected. The July revision, however, went from +1.9% originally stated to +1.5% now. That we’re still seeing positive numbers is a positive feature of present consumer confidence, though these figures, again, are still well off pre-pandemic levels. Core Inflation for August also remained steady at +0.3%, as expected and the same as July. Year over year, core is +1.6% — same deal: positive is good, but we’re no longer going gangbusters.

After the opening bell, we’ll see new results for Markit and ISM Manufacturing indexes, Construction Spending and Motor Vehicle Sales. We also expect some news on a possible deal between the two aisles of Congress, which this morning is being reported as a possible stimulus bill worth around $1.5 trillion.

Negotiations are in their final stages between House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin (the White House is directly involved in these talks, Republicans in the Senate are not). Should no deal be reached today, the House plans to pass its $2.2 trillion relief package and retire from DC until after the election. Stay tuned.

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