Week Ending September 18, 2020
Economic Data Dump…This week was a huge week for economic data.
What it means – Unless you are a junky for economic statistics and looked for it, the media left it out. Very little was covered. Historically, this has been the week during past Presidential Elections cycles when the incumbent point to their success or the opponent point to the incumbent’s failure prior to the November election. This week the media went silent.
GDP Explodes… The U.S. hit a record 33.1%
What it means – Wow, a record increase in GDP following a record decline of 31.4% due to a forced shut down to fight the spread of a virus from overseas.
U.S. Policy is far different than Europe and others and the U.S. is benefiting from the economic policies that where implemented to help businesses battle the shutdown and get cash into the hands of our citizens at a record pace.
New Business Applications… More people in joining the entrepreneur trend.
What it means – For the third straight month the U.S. is experiencing and increase in business applications. While the economy froze in the first half, covid was not the only thing our citizens have been catching. The U.S. has seen a 37.9% YOY increase in new business applications. This is a great sign.
PMI… October PMI (Purchasing Managers Index) 55.5.
What it means – According to the bureau of Labor Statistics, the October PMI was the highest in 20months.
Service Index…US Non-Manufacturing PMI hits 57.8
What it means – This is the highest it has been since May of 2018. The U.S. economy is already back above pre-Covid levels. Like the statistics above our economy is recovering. Unfortunately, it is geographical and has lots to do with policy at the local and state level. The biggest problems are CA, NV, IL, NY and NJ.
The EU continues to struggle. Their PMI is currently standing at 49.4. Below 50 shows a slowing economy.
Ask yourself why?
September retail sales…Up 5.4% over 2019.
What it means – With people moving out of the cities in search for the American dream, and safety, and better schools, they are buying the things they need in order to live outside the city. Like first time home buyers, we are also seeing families buying second cars or even a first along with new furniture and items to outfit a new home.
Unemployment… Dropped from 8.4% to 7.9% still way above pre-Covid levels and lots of work to do.
What it means – Job growth is slowing as the major cities and states like CA, NY, NJ and IL refuse to open hotels and restaurants to anywhere near capacity. This is putting the breaks on our economy. It will affect how programs are funded if people cannot work and there is no revenue to pay for all these government programs.
More importantly, permanent job loss is a real issue if we do not let companies open up.
Hours worked… Manufacturing and non-farm labor.
What it means – Manufacturing workers increased 0.2 hours per week to 40.2. Non-Farm workers increased from 34.6 to 34.7 hours per week.
The economy is in your hands. You are the dreamers, the doers, the savers, the creators of technology and the engine of ingenuity and creativity. Your dreams depend on the very policies you vote for. Do not let anything get in the way of making your dreams or your children’s dreams a reality. Let your creative juices and love for our country and the freedom we have inspire you to be the very best you can be. Control your destiny.
Have a wonderful week,
Doug De Groote, CFP®, MBA, CTC