U.S. Economic News

U.S. Economic News

May 27, 2020

U.S. News

The Wall Street Journal reports that a stark gap has emerged between the stock market and consumer sentiment, with stocks rebounding while consumers continue to be very negative about current economic conditions. A key explanation for the divergence may be that investors are betting on a quick recovery, helped by federal stimulus programs, while consumers are still feeling the pain of double-digit unemployment. WSJ

In an op-ed for the Financial Times, Robert Armstrong writes that global businesses – especially those in strategic, high-tech industries like semiconductor manufacturing – will be one of the main victims of deteriorating U.S.-China relations. Armstrong writes that fracturing between the two countries is likely to accelerate as COVID-19 reveals the costs of over-reliance on Chinese supply chains, requiring companies to prepare for a “two-track world” with separate corporate strategies for China and ex-China operations. FT

U.S. Economic News

U.S. Economic News

May 26, 2020

U.S. Economic Indicators

The Conference Board’s Consumer Confidence Index ticked up from 85.7 (revised) in April to 86.6 in May. Consumers’ assessment of current business and labor market conditions worsened, while near-term expectations for jobs, business conditions, and financial prospects improved. Conference Board Report

New home sales increased 0.6% in April to a seasonally adjusted annual pace of 623,000 but were down 6.2% from year-ago levels. The median sales price fell to $309,900 and the inventory of new homes edged down to 6.3 months at the current sales rate. Census Bureau Report

U.S. News

The Washington Post reports that surges in coronavirus cases at meat-processing plants around the country — despite improved worker protection measures — demonstrate how difficult it may be for many parts of the U.S. economy to return to ‘normal.’ In Iowa, Nebraska, and South Dakota, meat workers are responsible for 18%, 20%, and 29% of state coronavirus cases, respectively, emphasizing the predicament facing Midwest states as they work to ensure worker safety while keeping the country’s food supply chain operational. WaPo

U.S. Economic News

U.S. Economic News

May 22, 2020

U.S. News

The Wall Street Journal reports that as states begin to loosen coronavirus restrictions, many companies are finding it nearly as difficult to be open for business as to be closed as new safety protocols raise the cost of doing business. Businesses are experimenting with various strategies to cope with tighter profit margins, including cutting back on staff and services and charging customers a coronavirus surcharge. WSJ

According to the Financial Times, companies are offering everything from cruise ships to airport operating rights as collateral for COVID-19 rescue deals. Secured debt deals, once relatively rare in the corporate bond market, have grown increasingly popular as creditors seek additional protection for risky lending, though investors note that the real value of such assets to creditors in the event of bankruptcy is extremely difficult to assess. FT

U.S. Economic News

U.S. Economic News

May 21, 2020

U.S. Economic Indicators

Initial jobless claims fell 249,000 to 2,438,000 last week. The four-week moving average fell 501,000 to 3,042,000. DOL Report

Existing home sales fell 17.8% to a seasonally adjusted annual rate of 4.33 million in April and were down 17.2% compared to a year ago. Home sales declined in all four major regions, with the largest decrease occurring in the West. NAR Report

The Conference Board’s Leading Economic Index (“LEI”) declined 4.4% in April following a 7.4% decline in March. The continued decline in the LEI suggest that while business conditions may recover for some sectors and industries in the near-term, selective re-opening does not imply a rapid rebound for the economy at large. Conference Board Report

U.S. News

The Washington Post reports that House and Senate lawmakers are working on new legislation to improve the flexibility of the Paycheck Protection Program, potentially providing much needed support to millions of small businesses that have avoided the program due to overly restrictive terms. Policymakers are primarily focused on extending the period during which funds must be spent to qualify for loan forgiveness while also discussing removing the requirement that 75% of funds be spent on payroll. WaPo

U.S. Economic News

U.S. Economic News

May 20, 2020

U.S. News

The Wall Street Journal reports that the latest projections from the Congressional Budget Office show that the current economic recovery is likely to drag on through the end of next year due to collapsing investment spending and historic deterioration in the labor market. While job growth is expected to gradually recover in the second half of 2020, the CBO cited three factors that could further dampen labor market recovery: the end of the Paycheck Protection Program, persistent health fears, and increased state and local government layoffs. WSJ

According to the Financial Times, a new wave of discretionary consumer spending on durable goods has taken off as Americans cash in their stimulus checks. While surging demand for certain non-essential items has been a boon for some retailers, it by no means signals the end of the historic squeeze in consumer spending amid the rapid rise in unemployment. FT