Wednesday, November 25, 2020
Prior to our partaking in the festivities of the Thanksgiving holiday this year, we have one more full trading day today (and a half-day Friday). To make certain we’re all paying attention, a bevy of economic data has hit the tape before the market open, some of which may change the strongly bullish narrative we’ve enjoyed so far this week.
Chief among these are the weekly Initial Jobless Claims numbers, which normally are released each Thursday. The headline figure, 778K, is the second straight week with new claims growing 30K or more, from the 711K reported two weeks ago, which is our pandemic-era low as of today. It’s also the highest new jobless claims number in the past five weeks, and on pace to hit over 800K for the first time since October 11. Second-wave pandemic shutdowns and layoffs look to have reared their ugly heads.
Continuing Claims, posted as they are a week in arrears, did come down week over week, to 6.07 million from 6.37 million the prior week. These longer-term claims have been cut more than in half over just the past 10 weeks, which certainly looks like a positive sign. However, Pandemic Unemployment Assistance (PUA) rose 132K on the week, which suggests longer-term unemployed Americans aren’t necessarily finding new jobs so much as they are transferring unemployment assistance. More troubling, the PUA program is scheduled to expire at the end of the year, which would necessitate new congressional bills passed to bail out the American worker.
Durable Goods Orders for October provided a separate narrative, however: +1.3% on the headline more than doubled the +0.6% expected, though down a bit from September’s upwardly revised +2.1%. It marks the sixth-straight month in positive territory for Durables, following the bottom falling out in March and April of this year. Non-defense, ex-aircraft orders (a proxy for business investment) came in at +0.7% — higher than expected, though down a few ticks from the prior month — which is pretty impressive considering how the pandemic has kept most business employees remaining at home this fall.
The first revision for Q3 GDP was unchanged at 33.1% — a very strong figure that erased the Q2 crater at the heart of the pandemic’s economic impact. That said, analysts were hoping for something higher. Continued growth is currently expected for Q4 GDP, but with no new stimulus package out of Capitol Hill since the CARES Act ran out at the end of July, estimates range a bit on just how much growth we’re seeing this quarter.
Here at Zacks Investment Research, we wish all of our partners, customers and casual readers a Happy Thanksgiving. We hope everyone stays safe and healthy. This column will resume Friday morning.
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