Layoffs declined, but remained at very high levels. Also, consumer confidence declined while personal incomes and consumer spending also fell.
Initial Jobless Claims
Looking at weekly layoffs data, initial jobless claims filed by recently unemployed Americans during the week ending December 26th dropped to 787,000, a decrease of 19,000 claims over the previous week’s 806,000 claims, the Employment and Training Administration reported last week.
The four-week moving average, which is considered a more stable measure of jobless claims, rose to 836,750, which was 17,750 claims higher than the preceding week’s average of 819,000 claims.
While the week posted a decline for layoffs, the job market continues to suffer under COVID-19, especially as cases are on the rise.
“It’s still a very high number,” Diane Swonk, chief economist at accounting firm Grant Thornton, told the New York Times. “The signals aren’t exactly favorable.”
[Note to readers: because initial jobless claims were the only official economic data released last week, Economic Advisor is reporting on two key economic releases from the week before last, consumer confidence and personal incomes and spending.]
The Consumer Confidence Index continued declining in December, after decreasing in November, according to recently released data from The Conference Board. The Index dropped to 88.6 in December, down from 92.9 in November (a baseline of 100 was set in 1985).
The Present Situation Index, which measures consumers’ feelings on current incomes, business conditions and the job market, fell from 105.9 in November to 90.3 in December. That said, the Expectations Index, which gauges consumers’ views on short-term prospects for incomes, business conditions, and the job market, grew from 84.3 in November to 87.5 in December.
Not surprisingly, the recent new spike in COVID-19 diagnoses and deaths is shaking consumers’ faith in the economy, according to Lynn Franco, Senior Director of Economic Indicators at The Conference Board.
“As a result, consumers’ vacation intentions, which had notably improved in October, have retreated,” she explained in comments accompanying the Board’s release. “On the flip side, as consumers continue to hunker down at home, intentions to purchase appliances have risen. Overall, it appears that growth has weakened further in Q4, and consumers do not foresee the economy gaining any significant momentum in early 2021.”
Personal Incomes and Spending
Personal incomes declined by $221.8 billion, or 1.1 percent in November, according to the latest report from the Bureau of Economic Analysis. Disposable personal income (DPI), which is income after taxes, fell by $218.0 billion, or 1.2 percent.
“The November estimate for personal income and outlays was impacted by the response to the spread of COVID-19,” the BEA noted in its release. “Federal economic recovery payments slowed as pandemic-related assistance programs continued to wind down.”
Likewise, personal consumption expenditures (PCE), which describes household spending, fell by $63.3 billion, or 1.2 percent, in November. Personal outlays, which encompasses all personal spending, including household spending, as well as spending on services, interest payments, and mortgages, decline by $66.8 billion in November.
This week, we can expect:
- Monday – Construction spending for November from the Census Bureau and Department of Housing and Urban Development.
- Tuesday – Car and truck sales for December from the auto manufacturers.
- Wednesday – Factory orders for November from the Census Bureau.
- Thursday – Initial jobless claims for last week from the Employment and Training Administration; the trade deficit for November from the Bureau of Economic Analysis.
- Friday – Payrolls, unemployment rate and hourly earnings for December from the Bureau of Labor Statistics; wholesale inventories for November from the Census Bureau; consumer credit for November from the Federal Reserve.
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