First-time claims for unemployment insurance benefits continue to move in the right direction, falling during the week ending May 8 to 473,000, or a drop of 34,000 in seasonally adjusted terms, according to government data released Thursday. Over the past 13 weeks, initial claims have dropped in eight of those weeks and have increased in five weeks as ... READ MORE >
Coronavirus
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Interest rate update: Recent increase shows progress on the path to normalization
The yield on 10-year Treasury bonds is approaching 1.7%, within 20 basis points of already low pre-pandemic rates. The recent increase in the 10-year is in response to signs of an economic recovery and perceived risks around higher inflation. But sub-2% interest rates on the 10-year Treasury are far from what a healthy economy would support and suggests ... READ MORE >
CHART OF THE DAY: A do-over year for the Consumer Price Index
The inflation numbers for April released on Wednesday show the Consumer Price Index rising by 4.2% compared to April 2020, higher than the Bloomberg consensus forecast of 3.6%. The core CPI, which excludes the volatile food and energy components, rose 3.0%, up from the 1.6% year-over-year rate of increase in March. This marks the first time since ... READ MORE >
Frothy markets and the risk to the economic outlook in the era of low interest rates
The Bloomberg U.S. Financial Conditions Plus Index has reached 2.9 standard deviations above neutral, an unprecedented level that signals the possibility of froth in asset markets in line with the warning by the Federal Reserve’s Financial Stability Report issued on May 6. This comes at a time when U.S. monetary and fiscal policies stand at extremely ... READ MORE >
RSM Canada Financial Conditions Index: Bank of Canada providing global leadership
The next Bank of Canada monetary policy decision is three weeks away, and is coming at a time when talk is focused on when central banks will tighten their accommodative policies prompted by the global health crisis. The global economy is off to a better start than expected this year, prompting some discussion about excess demand overwhelming ... READ MORE >
CHART OF THE DAY: Estimating unemployment during the pandemic
Friday’s headline U3 unemployment rate of 6.1% for April is probably an undercount of the number of out-of-work people in the United States, not by design, but by the peculiar circumstances of the pandemic. An analysis of the labor report suggests that the unemployment rate, accounting for the effects of the pandemic, is substantially higher. By ... READ MORE >
U.S. employment report: Economy added a disappointing 266,000 jobs in April
An easing of commercial restrictions, mass vaccinations and pent-up demand racing ahead of the overall reopening of the economy bolstered hiring in April to the tune of 266,000 jobs as the unemployment rate increased to 6.1%, according to government data released Friday. While this report is disappointing compared to the consensus expectation of one ... READ MORE >
Jobless claims: More good news from the labor market
First-time jobless claims declined to 498,000 for the week of May 1 from an upwardly revised 590,000 during the previous week, as continuing claims remained elevated at 3.69 million, according to government data released Thursday. This data will not affect Friday’s employment report, which is now expected to show a gain of more than 1 million new jobs for ... READ MORE >
RSM UK Financial Conditions Index: Setting the stage for recovery
The U.K.’s vaccination and shutdown programs are an apparent success. The percentage of the most vulnerable people, ages 50 and over, who have received at least one dose of the vaccine ranges from 87% in London to 98% in Scotland, and the results speak for themselves. Newly reported COVID-19 cases have dropped from 60,000 a day in January to 2,000 in ... READ MORE >
CHART OF THE DAY: Capital goods shipments maintain upward trajectory
Monthly shipments of nondefense capital goods increased by nearly 5% during the first three months of the year compared to the months before the pandemic-induced economic shutdown. The forward-looking proxy for productivity-enhancing capital goods orders, or orders of nondefense capital goods excluding aircraft, increased 1.9% in March, which was ... READ MORE >