Monday Economic Report
Date postedDecember 3, 2021
- Initial unemployment claims totaled 199,000 for the week ending Nov. 20, the lowest level since the week of Nov. 15, 1969. Meanwhile, the 2,049,000 continuing claims for the week ending Nov. 13 marked a post-pandemic low. In addition, total unemployment insurance payments dropped to $45.2 billion in October, the lowest level since February 2020, after peaking at $1,395.8 billion in June 2020.
- New orders for durable goods pulled back for the second straight month. However, excluding transportation equipment, new durable goods sales rose 0.5% in October. Demand for nondefense capital goods excluding aircraft—a proxy for capital spending in the U.S. economy—increased 0.6% to a record $78.6 billion in October.
- Overall, the durable goods data continue to reflect a strong upward trend, even as manufacturers struggle with supply chain bottlenecks, worker shortages and soaring costs.
- After slipping to 52.1 in October, the slowest pace of growth since March, the IHS Markit Flash U.S. Manufacturing PMI inched up to 53.9 in November. Respondents continued to signal optimism in the outlook for the next six months despite ongoing concerns.
- In the IHS Markit survey, supplier delivery times remained near historic levels despite narrowing slightly in November. Input prices grew at the fastest rate in the survey’s history. Output prices pulled back from their record pace, although they remained very elevated.
- Manufacturing activity expanded for the second straight month in the Richmond Federal Reserve Bank’s district. Inflation remained a significant challenge, even with some easing in the latest data.
- The Index of Consumer Sentiment declined to 67.4 in November, the lowest level since November 2011, according to the University of Michigan and Thomson Reuters, largely on worries about higher prices.
- The PCE deflator rose 0.6% in October, the fastest monthly gain since April. Food and energy prices increased 0.8% and 4.9% for the month, respectively. Excluding food and energy prices, the PCE deflator increased 0.4% in October, up from 0.2% in September.
- Overall, the PCE deflator has risen 5.0% year-over-year, the greatest increase since November 1990. Core inflation has increased 4.1% since October 2020, the fastest pace of inflation since January 1991. With that said, the current forecast is for the core PCE deflator to be 2.5% year-over-year by the end of 2022.
- For its part, the Federal Reserve has started tapering its asset purchases, and there is an expectation that the rise in inflation will force them to accelerate the pace of the tapering. In addition, the Federal Open Market Committee is likely to increase short-term interest rates by mid-2022.
- Personal consumption expenditures jumped 1.3% in October, and personal income rose 0.5%. Total manufacturing wages and salaries also rose by 0.8% from $996.9 billion in September to $1,055.2 billion in October. More importantly, total wages and salaries have increased 9.8% year-over-year, with manufacturing data up 9.6% since October 2020.
- The personal saving rate decreased to 7.3% in October, the lowest level since December 2019, suggesting that Americans were dipping into their savings to make purchases for the month.
- The U.S. economy grew 2.1% at the annual rate in the third quarter, the slowest pace of growth since the pandemic began and little changed from the previous estimate of 2.0% growth.
- Real GDP should rebound in the fourth quarter, with 6.0% growth expected. For 2021, the forecast is for 5.6% growth. For 2022, the current estimate is for 4.3% growth. The U.S. economy is now 1.4% larger than at the end of 2019, or before the COVID-19 pandemic began.
