Labor Market Download:
*UI claims come out this am w new seasonal adjustment. Makes them better going forward but NOT comparable to previous weeks. Look at NOT SEAS ADJUSTED data and don’t forget to ADD special pandemic claims to total. Otherwise incomplets.
August Employment Situation:
*August has a long (more than 20 year history) of being a quirky month, most years w a large underestimate of initial employment gains.
*Temporary 2020 Census Hires will add several hundred thousand to overall number but go away at end of Sept.
*A quirk in timing and seasonal adjustment ADDED nearly 250K jobs at the state and local level for emp for July which will be at least partially if not entirely reversed in August. The losses in public education could be larger for Sept as school move to online and hybrid models.
*Small business hiring according to what has been most reliable source to date - home base - is flat to down for the month. That reflects the inability of firms to fully ramp up and stay afloat.
*Bulk of PPP loans run out of funding in late August and early September. Those losses likely show up in September not August.
*Beige book surveys for Fed districts revealed loss in optimism and slower growth. Chicago was an outlier in that it reported better improvement in activity, notably manufacturing BUT also reported that “pace of growth had slowed...”
Bottom Line: Momentum is slowing while labor market in deep hole. Headwind going into 4Q with cliff on Census jobs and cold weather closing outdoor venues with fear of contagion still high.
Biggest upside risk is if we really curbed pace of infections and ramped up testing enough to manage fears ab virus and get us spending and hiring more rapidly. Always hopeful but not holding my breath.
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