Blog / Economic Commentary

  • Weekly Economic Monitor – The Job Outlook

    By Scott J. Brown, Ph.D., Raymond James

    The Job Market Outlook – The U.S. economy lost 2.77 million jobs in the initial estimate for January, which is on par with what we saw a year ago (-2.79 million). Seasonally adjusted, this was recorded as a 49,000 gain (with private-sector payrolls up just 6,000). Still, accounting for the seasonal noise, the recent data indicated that the job market has cooled off significantly following a sharp rebound in the late spring and summer (payrolls averaged a 29,000 monthly gain over the three months ending in January). The slowdown reflects the pandemic surge (and efforts to contain it). The bigger test for the job market occurs from February to June, when payrolls normally ramp higher. The pandemic is likely to restrain job growth in the near term, but we ought to see stronger gains once vaccines become more widely distributed.

    This Week – The economic calendar thins out, with the Consumer Price Index being the only major data release. An increase in gasoline prices is expected to drive the CPI higher in January, while restraint on rents should keep core inflation on a moderate trend. Fed Chair Powell will speak to the Economic Club of New York on Wednesday. The topic is the current state of the job market.

  • Weekly Economic Monitor – GDP

    By Scott J. Brown, Ph.D., Raymond James

    GDP – Real GDP rose at a 4.0% annual rate in the advance estimate for 4Q20, a much more moderate pace of recovery than was seen in the third quarter. Details were mixed, but consumer spending showed a significant loss of momentum and monthly figures reflected weakness in November and December. The surge in the pandemic and efforts to contain it dampened holiday sales and travel. This may, in turn, give way to seasonally adjusted strength in 1Q21, as there should be less of a fallback in the unadjusted data. However, as the Federal Open Market Committee noted in its January 27 policy statement, “the path of the economy will depend significantly on the course of the virus, including progress on vaccinations.”

    This Week – There is more than the usual uncertainty in the Employment Report. Annual benchmark revisions to the establishment survey data (payrolls, hours, wages) are expected to be small, but seasonal adjustment could exaggerate the January figures. The January ISM surveys should reflect moderate strength, although the headline figures are likely to remain exaggerated by the pandemic’s impact on supplier delivery times.

  • Weekly Economic Monitor – The Fiscal Policy Outlook

    By Scott J. Brown, Ph.D., Raymond James

    The Fiscal Policy Outlook – As expected, the new administration has hit the ground running. In his first two days in office, President Biden issued executive orders which rescinded a number of previous directives or were aimed at ending the pandemic and easing the pandemic’s economic impact. For investors, the bigger issue seems to be the prospects for further fiscal support. Biden has proposed a $1.9 trillion package. That’s on top of the $900 billion passed at the end of last year. Passage of a bill this size will be an uphill battle, as the Democrat’s advantage in the House and Senate are as narrow as they can get. Still, it’s worth taking a step back and looking at fiscal policy over the last decade and what lies ahead after the pandemic has passed.

    This Week – The Federal Open Market Committee is widely expected to leave short-term interest rates unchanged and to maintain the current monthly pace of asset purchases ($120 billion). In his press conference, Chair Powell is likely to repeat that the pace of asset purchases will continue until there is “substantial” improvement in the labor market (that is, not anytime soon). Real GDP is expected to have risen at a more moderate pace in the advance estimate for 4Q20), reflecting strength into the early part of the quarter (1Q21 GDP growth should be more modest). Weekly jobless claims should begin to settle back (although still elevated).

  • Weekly Economic Monitor – The Inflation Outlook

    By Scott J. Brown, Ph.D., Raymond James

    The Inflation Outlook – For a variety of reasons, many investors are worried about higher inflation. While we may see reflation (a pickup in prices that were restrained due to the pandemic), a significant increase in underlying inflation appears unlikely. 

    This Week – January economic data will be subject to seasonal noise. FOMC minutes should reinforce that view that any change in policy is a long way off. 

  • Weekly Economic Monitor – The December Employment Report (and other stuff)

    By Scott J. Brown, Ph.D., Raymond James

    The December Employment Report (and other stuff) – Covid, covid, covid, politics, politics, politics. The new year has yet to show much of a break from 2020. The December Employment Report reflected an impact from the pandemic surge and further job losses in state and local government, but wasn’t bad otherwise. Democratic victories in Georgia’s run-off election mean a shift in Senate control (a 50-50 mix, but Vice President-Elect Harris will be the tie-breaker). There was an insurrection on Capitol Hill, as lawmakers were in the process of ratifying the November election results.

    This Week – The Consumer Price Index is expected to reflect higher gasoline prices in December, but core inflation should remain relatively low (with limited pressure in rents). Unit motor vehicle sales improved in December, but retail sales are expected to show weakness in holiday sales (although November may have been even more out of line with the usual seasonal pattern). Industrial production should indicate a relatively strong gain in factory output. The Fed’s Beige Book is expected to reflect an impact from the pandemic surge. Fed officials will be speaking, including Chair Powell, but don’t expect anything market-moving.