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Economic Data Deluge

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Declaring that the economic future is “highly uncertain” with “significant downside risk to outlook,” Fed Chair Jerome Powell addressed the public from the Peterson Institute for International Economics this morning. Though he said the reaction to the economic crisis was “swift and forceful,” Powell said “additional relief may be needed” from the Fed.

Powell said there is a “need to address a range of possible outcomes,” though none of these did he speculate would be necessarily positive events. “The pandemic raises long-term concerns,” as “prolonged recessions” can lead to “lasting damage” in the economy. In particular, he cited that 40% of households employed with a job in February making under $40K per year lost that job in March. This points directly to the severity of the employment situation in the U.S., particularly for those in the working class.

Though there is a real “Debbie Downer” aspect to Powell’s address — which is ongoing as this report is published, and market futures have slipped to mixed after major indexes previously in the green — Powell also said “I have every reason to believe we can get back” to the economic prosperity we had enjoyed for more than a decade. If there is anyone who understands the tools at his disposal to address this crisis, it is he. Powell also made sure to mention these “economic tools will be put away after the crisis.”

A new Producer Price Index (PPI) for April has been released this morning, following yesterday’s Consumer Price Index (CPI) which came in at 5-year lows. Today’s PPI headline was not just a 5-year low but an all-time one, at least since this index was revamped in the wake of the Great Recession 11 years ago: -1.3% was April’s PPI headline. The “core” read (subtracting food & energy costs) hit -0.3%, while core including trade sank to -0.9%.

That oil prices struggled mightily last month is accounted for with these numbers — big declines in Energy on lack of demand worldwide put massive pressures on PPI overall. April’s reads are also reflected in year-over-year PPI core, which is actually up 0.6% (the only figure in positive territory this morning), demonstrating that these energy declines, though considerable, follow relative strength in the Oil & Energy market previously. That said, year-over-year headline came in at -1.2%, the first-ever 12-month read in the negative for PPI.

For a comprehensive look at these issues and many others concerning the U.S. economy and stock market in the weeks, months and even years ahead, please take a look at our latest report, “Re-Allocating Investments for a Post-Covid World,” written by Zacks Chief Strategist John Blank and Zacks Director of Research Sheraz Mian. A link to the 30+ page PDF can be found in this article.