Jobless Claims Rise Amid Virus Surge Initial claims for jobless benefits, a proxy for layoffs, rose to a seasonally adjusted 742,000 last week, up from the 711,000 filed a week earlier.
(…) The number of people collecting unemployment benefits through regular state programs, which cover most workers, fell to 6.4 million for the week ended Nov. 7 from 6.8 million a week earlier, on a seasonally adjusted basis, according to the Labor Department. Continuing claims declined throughout the summer and into the fall, as many laid-off workers found jobs or exhausted their state benefits. The number of people collecting these benefits has now fallen below levels reached in 2009, during the last recession.
Some who have exhausted their state benefits are now collecting money through a federal program that provides an extra 13 weeks of benefits. About 4.4 million people were receiving aid through this extended-benefits program in the week ended Oct. 31, up from 4.1 million a week earlier, Labor Department data show. (…)
Job Market Growth Slows Across U.S. as Covid-19 Cases Surge The labor market is flashing signs of slowdown in states where coronavirus cases are surging—and in places where they are not.
The growth in the number of daily job postings in Midwestern states, where the virus is raging, is slowing sharply compared with October, according to data from the job site ZipRecruiter. But other states with among the lowest virus infection rates in the nation, including California, New York and North Carolina, are also seeing a slowdown.
The regional data suggest it is not the level of Covid-19 infections but how state officials, businesses and consumers respond to the pandemic that appears to have the greater impact on the pace of the labor market’s recovery in a state. (…)
Political views regarding the virus are key to driving decision making among consumers and policy makers. Republicans are much less likely to be worried about the virus than Democrats, according to polling by Gallup. That suggests consumers are more likely to venture out in Republican-leaning states despite virus risks. Republican governors, too, have been less likely than Democrats to impose restrictions on businesses and individuals, such as requiring social distancing or mask wearing. (…)
The number of weekly labor shifts among workers has been affected across regions in recent weeks, according to Ultimate Kronos Group, a workforce management software company. The weakness has been particularly pronounced in the Midwest, said Dave Gilbertson, vice president at UKG.
“We’re seeing a real struggle to recover in the Midwest,” said Mr. Gilbertson. “Since Labor Day, man, it’s been a struggle to see hiring improve and to see the number of shifts worked by hourly workers start growing.”
Data: Census Bureau Household Pulse Survey. Chart: Axios Visuals
U.S. Leading and Coincident Indicators Remain Healthy in October
The Conference Board reported that its Composite Index of Leading Economic Indicators increased 0.7% during October (-2.9% year-on-year); in line with expectations and the second consecutive gain of this magnitude. The Leading Index is comprised of 10 components which tend to precede changes in overall economic activity. Seven of those components contributed positively, led by declining jobless claims, which just rose in the latest week. Two were unchanged, while new orders of nondefense capital goods excluding aircraft were a drag. Given the dependence of the economy on the progression of COVID-19, the normally forward-looking measures of the Leading Index are less telling. (…)
Two Fed Officials Voice Concern on Economy as Virus Cases Surge “The fact that we don’t have a fiscal package is very concerning,” Cleveland Fed leader Loretta Mester said.
(…) “We’re in a good place with our monetary policy, because we are very accommodative,” Ms. Mester said, and it isn’t clear the Fed could do something new given the economic outlook, she said. (…)
(…) Mr. Kaplan said economic activity over the last three months of the year could once again contract, following the third quarter’s rebound.
He said he wouldn’t rule out the U.S. sliding back into recession. “The risks are all the downside,” he said. “The only good news, if there is negative growth and the rebound stalls, our own view is it will be temporary” and not go beyond a quarter or two. (…)
Mnuchin-Powell Split Shows Rare Discord as Economy Struggles Treasury chiefs and Fed chairs typically coordinate closely at times of crisis.
Mnuchin Won’t Extend Emergency Lending Programs Treasury Secretary Steven Mnuchin declined to extend several pandemic emergency-loan programs established jointly with the Federal Reserve that are set to expire on Dec. 31. The Fed said it would prefer that the programs continue.
As a result, on Dec. 31 several novel Fed programs that have backed corporate credit and municipal-borrowing markets and that have provided loans to small and midsize businesses and nonprofits during the coronavirus pandemic will end. (…)
Credit markets, which nearly froze in March as the pandemic triggered a financial shock, have been rehabilitated, Mr. Mnuchin said. “Banks have the lending capacity to meet the borrowing needs of their corporate, municipal and nonprofit clients,” he said. (…)
Mr. Powell had indicated in remarks Tuesday that he didn’t think it would be appropriate to allow the programs to expire. “When the right time comes, and I don’t think that time is yet or very soon, we will put those tools away,” he said. (…)
Several presidents of Federal Reserve Banks, who have no formal role in deploying the lending facilities, had argued strongly in public in recent days that the programs should be extended. (…)
Ending the programs could also deprive some businesses and governments of access to low-cost credit if market conditions worsen. The Fed and Treasury had recently overhauled and expanded a suite of lending options available to small and midsize businesses and nonprofits through their Main Street program. (…)
In his letter Thursday, Mr. Mnuchin asked the Fed to return more than $70 billion in funds that had already been transferred to the central bank to cover loan losses and that won’t be needed as a result of lower lending volumes. (…)
“By asking for the money back, what Mnuchin does is he makes sure it’s not there for Biden’s Treasury secretary. You’re greatly reducing the firepower that’s available to your successor,” said Mr. Guha. “This is reckless politicization of market-stabilization policy.” (…)
The dispute over whether to extend the lending backstops is the most significant divide between the Fed and the Treasury Department, which had mostly collaborated smoothly this year over providing emergency support after the pandemic convulsed Wall Street. (…)
It’s not a great idea to end this cooperation just as the pandemic is doing its worst again. Add the non-renewal of benefits at year’s end and a transition to a new U.S. president with little political capital, and January looks like a point of high vulnerability. (…)
U.S. Home Sales Rose to 14-Year High in October Sales of previously owned homes climb 4.3%, fueled by low interest rates, desire for pricier houses
(…) The October sales marked a 26.6% increase from a year earlier. (…) The median existing-home price rose 15.5% from a year earlier to $313,000, a record high nominally and adjusted for inflation, NAR said.
“Home sales are just booming in the current environment,” said Lawrence Yun, NAR’s chief economist. “The upper-end market is really flying.”
(…) A severe shortage of homes for sale is boosting demand for newly built housing, which could spur more hiring and spending by home builders. Increased home sales can also lead to consumer spending on appliances, furniture and other home goods. (…) Demand for single-family homes has also extended to the rental market, where rents on single-family homes are rising at the fastest rate since last decade’s foreclosure crisis. (…)
There were 1.42 million homes for sale at the end of October, down 2.7% from September and down 19.8% from October 2019, according to NAR. At the current sales pace, there was a 2.5-month supply of homes on the market at the end of October, a record low. (…)
This is the lowest level of inventory for October since at least the early 1990s.
What a 95% Effective Vaccine Could Do Is Pretty Exciting A percentage point here, a percentage point there and pretty soon you’re talking about real progress in the battle against Covid-19.
(…) What would change with a vaccine that is 95% effective at preventing the symptoms of Covid-19, even assuming it doesn’t reduce disease severity for the 5% whose cases it doesn’t prevent (when it fact it probably does)? Well, that 1% chance of dying from the disease would fall to 0.05%, a 20-fold reduction. To take it out of percentages, deaths would drop from 1,000 for every 100,000 infections to 50. The 250,000 death toll so far would be reduced to 12,500. And while I’ve been ignoring the very different fatality risks by age group to keep things simple, it would mean the risk of death for those 35 to 44 would fall from 68 in 100,000 to three, and the risk for those 75 to 84 would fall from 8,500 in 100,000 to 425.
In fact it would probably fall much more than that, if enough Americans were vaccinated. The trial data released so far do not indicate if the vaccines prevent infections, just symptoms. But if they have any impact on the former, as seems likely, they would also slow or even halt the spread of Covid-19, meaning that the risk of getting infected would fall alongside the risk of getting severely ill if infected.
A rough estimate based on the infectiousness of Covid-19 is that about 70% of the population would have to be immune for its spread to slow without any social distancing or other preventative measures. The latest “nowcasting” estimate from the covidestim model assembled by epidemiologists and biostatisticians at Harvard and Yale is that close to 55 million Americans, nearly 17% of the population, have been infected with Covid-19 so far. At the rate things are going that could be 30% (or more) by the time vaccines start to become widely available.
If the vaccines turn out to be 95% effective at preventing infections, and previous infections with the disease do too, then this would mean about 145 million previously uninfected Americans (44% of the population) would have to be vaccinated in order to reach the 70% threshold. Those are some big ifs. The actual herd-immunity threshold might be higher or lower than that, and there are other complications. But it’s an indication of what 95%-effective vaccination might accomplish. Seems pretty exciting to me.
Also from John Authers:
It’s also conceivable that something goes wrong with vaccine safety or the manufacturing process. Most precariously, there is what is known as “vaccine-hesitancy.” Across the world, many are reluctant to take one. These are the results of surveys conducted in the U.S. and western Europe for Deutsche Bank AG. They suggest that politicians may be forced to make vaccinations mandatory, which could make the politics of 2021 very dangerous:
