Publications

U.S. News

The Wall Street Journal reports the coronavirus-induced recession has forced state and local governments to cut 1.5 million jobs thus far – mostly concentrated in the education sector – with more job losses expected in the months to come. While states have largely avoided raising taxes by cutting spending and dipping into reserves, this may change as uncertainty about the virus and future revenues rise. WSJ

According to the Financial Times, recovery in the retail sector is beginning to flat-line as foot traffic at U.S. malls begins to decline, especially in areas that are experiencing large increases in COVID cases. In these areas, some executives have discussed re-closing stores until the virus subsides – a troubling sign for many debt-laden retailers who are relying on improving sales to avoid bankruptcy. FT

U.S. Economic Indicators

The Job Openings and Labor Turnover Survey (“JOLTS”) report indicates that the number of job openings increased 401,000 to 5.4 million in May. The number of hires increased to a series high of 6.5 million, while the quits rate rose to 1.6 percent. BLS Report

U.S. News

Bloomberg reports that U.S. house prices are expected to experience the first annual decline since 2012 during the 12 months ending May 2021, falling by an estimated 6.6% according to a recent forecast by CoreLogic. As the pandemic wears on and unemployment remains elevated, the recent buying spree driven by pent-up demand and low interest rates will ease, causing home prices to decline overall. Bloomberg

According to the Wall Street Journal, the OECD predicts that the jobless rate for OECD members will hit 9.4% in the final three months of the year – the highest level since the 1930s – and could rise as high as 12.6% if there is a second wave of coronavirus outbreaks. The research group warned that the premature withdrawal of government stimulus and wage subsidy schemes could hinder recovery, and is advocating for the creation of additional government programs to encourage hiring. WSJ

U.S. Economic Indicators

Initial jobless claims fell 55,000 to 1,427,000 last week. The four week moving average fell 117,500 to 1,503,750. DOL Report

The U.S. economy added 4.8 million jobs in June, above expectations. The unemployment rate fell to 11.1% and labor force participation increased from 60.8% to 61.5%. BLS Report

The U.S. trade deficit increased from $49.8 billion (revised) in April to $54.6 in May. The goods deficit rose by $4.2 billion while the services surplus fell by $0.6 billion. Census Bureau Report

New factory orders for manufactured goods increased 8.0% in May following a 13.5% decrease in April. New orders excluding transportation increased 2.6%, while new orders for nondefense capital goods excluding aircraft rose 1.6%. Census Bureau Report

U.S. Economic Indicators

The ADP Employment Report shows that private-sector employment increased by 2,369,000 jobs in June, below the consensus estimate of 3.5 million. The services sector gained 1,912,000 jobs, while the goods-producing sector gained 457,000 jobs. ADP Report

Construction spending decreased 2.1% in May to an annualized rate of $1.36 trillion. Private construction fell 3.3% and public construction rose 1.2%. Census Bureau Report

The ISM Manufacturing Index rose 9.5 points to 52.6 in June, indicating the sector is in expansion again. The Employment Index rose 10 points to 42.1, while the New Orders Index rose 24.6 points to 56.4. ISM Report

U.S. News

The Washington Post reports that employers are increasingly turning to pay cuts as a means to mitigate job losses during the current crisis, resulting in reduced pay for over 4 million private sector workers while over 6 million workers have been forced to work part-time. More recently, pay cuts have grown increasingly common among higher-paid workers, signaling that the depth of the recession is impacting even the most-typically insulated from financial strain. WaPo

U.S. Economic Indicators

The Conference Board’s Consumer Confidence Index increased from 85.9 (revised) in May to 98.1 in June. Consumers’ assessment of current conditions and consumers’ short-term outlook for income, business, and labor market conditions improved from last month. Conference Board Report

U.S. News

The Washington Post reports that with the application window for the Paycheck Protection Program set to close at midnight, lawmakers are now deciding how best to allocate the remaining $130 billion in unused funds. While an extension of the program is a possibility, it seems increasingly likely that leftover funds will be redirected towards more targeted policy efforts that better address the changing needs of small businesses. WaPo

The Financial Times reports that U.S. companies are filing for bankruptcy at their fastest pace since 2013, highlighting the strain on company revenues caused by the coronavirus pandemic and subsequent lockdowns. In addition to rising corporate bankruptcies, there are other signs of growing financial distress in capital markets including increases in the number of companies defaulting on their debt and a near-doubling of companies downgraded to triple C plus since the start of the year. FT