The strong upward momentum in the economy should carry us well into next year even under a Biden-Harris administration. A major unknown is who controls the Senate. If Republicans can maintain control, it will limit the damage we would otherwise expect from some of the Biden-Harris campaign promises.
The Week That Was
The economy continues to recover rapidly.
The latest employment reports show October was another strong month for workers. The unemployment rate is at 6.9 percent, compared to 7.9 percent a month ago, and the number of private-sector jobs increased by a strong 892,000.
This report is consistent with weekly data on initial unemployment claims. Initial unemployment claims remained in the vicinity of 750,000, down about 70,000 from a month ago. There were 7.3 million people receiving unemployment insurance payments in the third week of October, compared to 11.8 million a month earlier. The insured unemployment rate fell to 5.0 percent, down from 8.1 percent a month earlier.
October ISM business surveys reported a continuation of very strong growth. Manufacturers and service companies continue to report a sharp increase in production and new orders. Output was unchanged for service companies. This suggests the current upward momentum will continue.
What to Expect Later This Week
The only significant economic news will be Thursday’s weekly employment reports. With businesses reporting strong new orders, these numbers should continue to show the economy ended October on a strong note.
U.S. COVID Cases Soar; Deaths Still Contained
Charts through last week show daily COVID cases continued to soar to new highs. Fortunately, daily death rates show only a relatively slight increase.
CDC data show hospitalization rates through October 17 remained at moderate levels. (Click on the hyperlink to see the charts.)
As people are learning, well over 99 percent of those infected have little if any problem dealing with COVID.
I join the long list of pollsters who got it wrong on the election. Moreover, pending Senate races in Georgia raise the possibility of Democrats taking control of the Senate.
Given their disappointment in losing some seats and having Republicans cut into their majority, House Democrats reportedly urged their leaders to stop the nonsense of pushing for socialism and defunding the police. It doesn’t sell very well.
There were other positive developments in the election results. California voters overwhelmingly rejected policies promoting diversity over merit, and Republicans attracted more minority voters. These could be early signs of a move toward viewing individuals based on their character instead of the color of their skin.
Whatever the outcome of the dispute over the presidential election results, the Federal Reserve promises to keep flooding the system with money and holding interest rates close to zero. That suggests good reason to stay positive even though the market is still volatile.