Jobs: Sharp Downward Revisions In The US, An Outright Plunge In Canada
The economy created +49k jobs in January, right around expectations. However the report was not nearly as strong as it looked. The employment situation in Canada took quite a grim turn for the worse, losing a huge -213k jobs in January.
Ever since March, Americans have been saving much more of their income than usual. It is expected that as the weather gets warmer, and as Covid becomes more under control, consumers will go on a delightful spending spree.
As we know, the Federal Government has used fiscal stimulus to help support the economy which has been devastated by Covid. Now another round of stimulus, the American Rescue Plan (ARP), is on the table for $1.9 trillion, and if you add those three up you get to $5.2 trillion dollars.
The employment report for December was a nasty surprise. The consensus expectation had been for a gain of 50k jobs, but we had expected there would be a loss in jobs, maybe as much as -50k. Instead it was substantially worse at -140k.
The October 2020 employment report was very strong all around. The economy gained 638,000 jobs vs expectations of 530,000, while the unemployment rate plummeted from 7.9% to 6.9%, much better than expectations of 7.6%.
Economic Analysis: US Q3 GDP Report & Looking Ahead
Q3 revealed strong domestic demand, but the rebound is short-lived as Q4 macroeconomic conditions are much less favorable for growth. With the absence of any new fiscal stimulus before year-end, the progress of the US job market stalled, and political uncertainties underway, the recovery should be much slower in Q4 2020.
The U.S. elections will spark a period of high uncertainty and market volatility until the end of the year. Choosing between the two candidates will mainly mean choosing be-tween a bigger or smaller federal government.
At its Wednesday meeting, the Fed suggested that it is likely to hold interest rates near 0% through 2023. It was the first meeting since Powell’s Jackson Hole speech when he announced the policy shift to “inflation targeting” which effectively focuses on pushing inflation up.