Home Budget & Tax News Economic Recovery Continues Despite Lagging Job Growth

Economic Recovery Continues Despite Lagging Job Growth

Most economic numbers this week continue to point to a rapid recovery in the overall economy. This is occurring even as the recovery in the job market lags the rest of the economy.

Weekly initial unemployment claims remained close to 1 million for the third consecutive week. However, insured unemployment payments in mid-August totaled 14.5 million. This is down 223,000 from the previous week, and down by a million from a month ago.

Overall, the news remains mostly positive. The economy is rebounding despite the signs of a sluggish recovery in the job market. Second-quarter profits were much better than expected. The Fed says monetary policy will remain highly expansive, and the polls continue to show President Donald Trump narrowing his deficit to Joe Biden in the polls. Even the coronavirus is trying to cooperate (see below).

Reports for July show consumer spending up 2 percent and wages and salaries up 1.4 percent. The gains bring both to 95 percent of what they were at their peak in February. New orders for durable goods in July increased to 94 percent of their peak in February. Orders other than transportation and defense were at 97 percent of their February peak.

The Markit business surveys for early August show manufacturing and service companies in the mid-50s. The expansion in manufacturing was the strongest since January 2019.

Although consumer confidence fell in July as the job market showed only modest gains, the rebound in the economy following its collapse has been extremely encouraging.

What to Expect Next Week

The closely watched ISM surveys for manufacturing and service companies are due next Tuesday and Thursday. Based on the Markit surveys, both ISM surveys should again be in the upper 50s, pointing to a strong further recovery in August.

On Friday, the good news should continue with the August jobs report. With manufacturing registering a strong gain and with insured unemployment down by a million workers, the employment report should be very encouraging.

COVID-19: Daily Death Rates Trend Lower

In spite of the opening up of much of the economy, the daily death rate from the coronavirus continues to decline, both throughout the world and in the United States. Although the media continue to focus on total deaths (which continue to increase, of course), the declining trends in both cases and deaths are a very positive sign.

Source: Worldometer.com

The extremely low probability of serious consequences from contracting COVID-19 means the remainder of the economy can be safely reopened.

Market Outlook

Stocks were mixed again this past week. The Nasdaq and QQQs and S&P500 all soared to new all-time highs based on the performance of mega technology stocks. Small cap ETFs fell in value by 1 percent.

My analysis shows the S&P500 is 4 percent above fair value and the Nasdaq is much further overvalued. Even so, the highly expansive monetary policy can drive stock prices still-higher.

Robert Genetski
Robert Genetski, Ph.D., one of the nation’s leading economists and financial advisors, has spent more than 35 years promoting the use of classical economic and investment principles for sound financial decisions. He heads ClassicalPrinciples.



Please enter your comment!
Please enter your name here

- Advertisment -

Most Popular

This Week in the Heartland Daily News

Eileen Griffin covers the biggest stories from this week in the Heartland Daily News. https://youtu.be/CyUEg4xvI_c Referenced stories: Biden's California Dream Stop Social Media Censorship Act Proposed In Rhode...

4 Myths About the Election Integrity Law in Georgia

By Mike Howell The Heritage Foundation released a fact check Friday of some of the most egregious lies being echoed by members of Congress, the media, Hollywood,...

Poll Finds that Most Americans Oppose Left-Wing Corporations Influencing Politics

By Eric Lendrum Anew poll found that well over half of Americans are against large and left-wing corporations attempting to influence government and everyday politics,...

Coalition Formed to Push Federal Stimulus Spending Directly to Wisconsin Students

By Benjamin Yount (The Center Square) – Supporters of the latest plan to spend nearly $2 billion in federal stimulus money on schools in Wisconsin...
- Advertisement -

Recent Comments

Many Climate Crisis Claims Are Based on Manipulated Science on How to End Biden’s Fake Climate Apocalypse
Scottar Brooke on Free Speech? Forget It.
Randy M Verret on The Gaslight Election
S. T. Karnick on The Gaslight Election
Randy M Verret on The Gaslight Election
S. T. Karnick on The Gaslight Election
Randy M Verret on The Gaslight Election
S. T. Karnick on The Gaslight Election
Randy Verret on The Gaslight Election
Randy Verret on The Gaslight Election
Breonna Taylor Settlement: What it means for No-knock Warrants – Gun News on U.S. Senator Attacked by Mob
Breonna Taylor Settlement: What it means for No-knock Warrants ~ N6AQ.com on U.S. Senator Attacked by Mob