Thursday, May 6, 2021

New jobless claims: 1st target achieved!


 - by New Deal democrat

New jobless claims continue to be the most important weekly economic datapoint, as increasing numbers of vaccinated people and outdoor activities have led to an abatement of the pandemic - new infections are the lowest in 9 months, and deaths are at their lowest point in a year. 

Eight weeks ago I set a few objective targets for new claims: to be under 500,000 by Memorial Day, and below 400,000 by Labor Day. Subject to revisions, this week we hit the first target, as seasonally adjusted claims declined 92,000 to 498,000. 

On a unadjusted basis, new jobless claims declined 107,390 to 504,670. The 4 week average of claims also declined by 61,000 to 560,000. All of these were new pandemic lows.

Here is the trend since last August: 

To put these in perspective, last year in March and April we were seeing news claims on the order of 6 million to 7 million per week! On the other hand, the current level of claims was typical of recessions in the 50 years prior to the pandemic:

Continuing claims, which are reported with a one week lag, and lag the trend of intitial claims typically by a few weeks to several months, rose slightly off last week’s pandemic lows. On an unadjusted basis, they rose 2,533 to 3,786,096, while after seasonal adjustment they increased 37,000 to 3,690,000:

The long term perspective again shows that these are equivalent to the worst levels of most previous recessions:

Tomorrow I expect the April jobs report to show a gain of well over 1,000,000 jobs, and possibly closer to 2,000,000. And because this week’s jobless report will be part of May’s reference period for jobs, it bodes well as a starting point for next month as well.

Wednesday, May 5, 2021

The long leading indicator of credit conditions has just been updated by the Fed


 - by New Deal democrat

The easing or tightening of credit conditions has a good track record as a long leading indicator, giving us information about whether the economy will be expanding or contracting in 12+ months.

The Fed just updated its Senior Loan Officer Survey for Q1, which covers both the easing or tightening of credit supply on the one hand, and demand for credit on the other. I have a report on this over at Seeking Alpha, discussing its implications for the next year.

As usual, clicking over and reading brings you valuable new information, and rewards me just a little bit for my efforts.

Tuesday, May 4, 2021

Coronavirus dashboard for May 4: Keep the faith; vaccinations work!


 - by New Deal democrat

While there has been some renewed DOOOMishness in the press about whether the US will ever reach “herd immunity” or not, I remain more sanguine.

Here’s the overall picture of cases and deaths from the past 12 weeks (note: the wintertime peaks no longer show in this close-up):

The incipient “4th wave” has already receded, and deaths have continued to very slowly decline. Both cases and deaths are now 80% below their peaks.

Both cases and deaths have also all but vanished among the heavily vaccinated senior citizens:

COVID is now, relatively speaking, a young person’s disease. The one item of real concern is the decided increase in cases among those aged 14-17, suggesting that reopening schools in the face of new variants that transmit much more easily and are more infectious to young people was a terrible mistake. Hopefully approval of the vaccines for teenagers, apparently to happen shortly, together with summer vacation, will take care of this issue before fall classes begin.

As a percentage of the total population, people partially and fully vaccinated continue to increase:

This probably had much to do with the fizzling of the “4th wave.”

Keep in mind that we *know* that 10% of the US population has had *confirmed* COVID infections. Estimates of how high the true number of infections is, run as high as 33% of the entire population. If this group is randomly distributed between those vaccinated and those not vaccinated, then the total % of the US population with resistance to COVID is probably about 2/3’s - in short, getting pretty close to the threshold where “herd immunity” might come into play.

In other words, if a relatively small percentage of vaccine “resistors” change their minds (and there is evidence for some of that happening), and the disease continues to spread for a short while among the unvaccinated, those two occurrences alone might push us over the “herd immunity” threshold in several months.

Keep the faith!

Monday, May 3, 2021

ISM manufacturing, construction spending show modest declines, but the Boom is still ongoing


 - by New Deal democrat

It’s the first of the month, which means we get our first look at April data in the form of the ISM manufacturing index, as well as March construction spending.

Manufacturing has been running not just red hot, but white hot in the past few months. Although it pulled back a little in April, it is still in the range of historic highs:

The leading new orders index is just below 65, which is slightly below its best levels of the past year, but above every other level but 5 months in every other year going back to 2005.

The manufacturing Boom is still ongoing.

Nominally both total and residential construction spending in March made new all-time highs:

But when we deflate by the cost of construction materials, spending has actually declined since the beginning of the year:

It is still running hot compared with the last 10 years, however.

Bottom line: modest declines in both of these very leading sectors, but nothing to be concerned about at this point.