The RSM US Manufacturing Outlook Index rose for the second month in a row in September as economic conditions continued to improve. The index, which is based on surveys of manufacturing activity and sentiment by regional Federal Reserve banks, came in at 0.7 standard deviations above expectations, up from 0.4 standard deviations recorded in August. The ... READ MORE >
Joseph Brusuelas
CHART OF THE DAY: Junk bonds are the canary in the coal mine
The recent surge in coronavirus infections is causing renewed concerns about economic growth and is likely exerting an indirect effect on the bond market, increasing the yield on low-rated/high-yield corporate bonds relative to the guaranteed yield of U.S. Treasury bonds. When the market becomes concerned about the growth and viability of ... READ MORE >
Tracking the spread of coronavirus: Prelude to the cooler months
There has been a 20% increase in the number of states reporting a rise in coronavirus cases since a week ago – an unfortunate but not unexpected trend. We are entering the colder months – when infections are expected to rise as people move inside – and we have yet to lower the rate of infection to the insignificant levels that might allow for the return ... READ MORE >
Initial jobless claims: No meaningful improvement in the pace of firings
The pace of first-time jobless claims over the past few weeks denotes some slowing in the easing of firings across the economy. The stalling out suggests that the easy gains of the recovery’s early stages are likely in the rear-view mirror and the hard work of digging out of the economic abyss lies ahead. One gets the sense that the reality of an ... READ MORE >
CHART OF THE DAY: Resurgence of pandemic in the U.K.
The sharp sell-off across financial markets on Monday is linked to fears about a global resurgence of the pandemic. Nowhere is that more evident than in the U.K., where R – the reproduction rate of COVID-19 – is approaching 1.7. That is akin to a nuclear event in terms of public health. An R at that reading could conceivably result in another round of ... READ MORE >
Tracking the spread of COVID-19: A resurgent virus, and a grim milestone
Following a late-summer lull in the coronavirus pandemic, the rate of infections has resumed its increase in the United States and is poised to intensify in the coming weeks, RSM’s modeling shows. This comes as the number of coronavirus deaths will soon pass a grim milestone: 200,000 in the United States since the first death was recorded in February. ... READ MORE >
Initial jobless claims remain elevated at 860,000
The pace of firings in the U.S. economy remains well above anything observed during the Great Financial Crisis as 860,000 workers filed for first-time jobless claims for the week ending Sept. 12, a reflection of the deep scarring in the domestic labor market and economy. An additional 658,737 filed for federal Pandemic Unemployment Assistance, bringing ... READ MORE >
Monetary policy and inflation in the modern era
The Fed is embarking on a new era in monetary policy, switching from its point target of 2% inflation to a target range of 1% to 3%. This change is predicated on longer-run structural changes in the economy that are inherently disinflationary, a real neutral interest rate near zero and much slower growth in the economy, all of which have reduced the ... READ MORE >
Tracking the spread of COVID-19: A summer so foul
There have been more than 6.7 million coronavirus cases and more than 198,000 deaths in the United States, according to the WorldoMeters database. Despite improvement in recent weeks, the rate of infections remains elevated heading into the fall. All of this has occurred in the eight months since the first case was reported in January, with 74% of all ... READ MORE >
Savings, the money supply and inflation during a pandemic-induced recession
During the dark ages of economics, the quantity theory of money held forth that the amount of money swooshing through the economy determined everything from inflation to economic growth. An excess supply of money available to the public would chase a limited supply of goods, inducing higher inflation and thereby limiting growth. The changing structure ... READ MORE >