Job Market Improvement Stalled, Implications for Fiscal Policy Uncertain

  • Jobless claims rose for the first time since the beginning of the pandemic. Department of Labor data showed they rose to 1.42 million from 1.30 million last week.

  • A key takeaway from today’s release is that the reopening rollback is definitely impacting the economic rebound. It appears as though the improvement we observed has stalled.

  • The magnitude of the weekly jobless claims data is still significant. This is the 19th consecutive week claims were above 1 million. At the worst point of the last economic downturn, claims averaged 650k in the Spring of 2009.

  • As of now, we are reading that the Republicans and the White House are still in the process of prioritizing their agenda. The broader implication of this data is likely to be revisited in the coming days, potentially after the GOP releases its bill and then seeks to negotiate with the Democrats.

  • Legislative Update: Some thought it was possible that separate bills may be considered; One that would extend unemployment benefits and then another that would include other elements that have been recently contemplated. Today, that possibility was more or less struck down, along with the chance of seeing a final GOP bill today. It seems like the Republicans are shooting for Monday, July 27 to release its version of a fifth phase of COVID-19 relief.

  • This week’s Dallas Federal Reserve national Mobility and Engagement Index (MEI) data point turned slightly positive, as of the week ending July 18. On a positive side, the MEI seems to have plateaued, although the problem remains that it is still very much in negative territory.

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