With some lawmakers in Washington seemingly unconvinced that the economic situation facing Main Street is acute enough to warrant another $2.4 trillion in virus relief spending (the price tag is a reference to the compromise deal Democrats offered Steve Mnuchin and Mark Meadows), economists warn that fiscal failure risks oblivion for many small businesses and everyday Americans.
Although most economic indicators continue to reflect the rebound from the March/April collapse, some higher-frequency data suggests the recovery is losing momentum. For example, US jobless claims recently jumped back above 1 million, snapping a two-week streak of declines.
On Thursday, just ahead of Jerome Powell’s hotly-anticipated remarks at this year’s virtual Jackson Hole symposium, the latest data showed 1,006,000 Americans filed for unemployment benefits last week. That was in-line with market expectations.
Last week’s total was revised down to 1,104,000. The four-week moving average fell to 1,068,000.
With stimulus talks still deadlocked and Donald Trump’s executive order extending extra federal unemployment assistance offering little more than a short-term Band-Aid, the weekly claims data is one of the few “official” real-time economic indicators at the market’s disposal.
Trump’s order diverted funds from disaster relief, a questionable decision ahead of what’s expected to be one of the most active hurricane seasons on record. Hurricane Laura made landfall in Louisiana early Thursday as a Cat 4 storm.
Continuing claims in the week ending August 15 were 14,535,000, down 223,000. That was slightly more than the 14.4 million economists were looking for.
Total claimants fell by 1,042,323 in the week ending August 8, to 27,017,232.
At the margins, this should increase the sense of urgency inside the Beltway, but that’s become a somewhat generic assessment. Republicans have shown a willingness to consider so-called “skinny” bills that would provide relatively scant funds for the postal service along with some other funding on which there’s bipartisan agreement, and there’s talk of attaching such a bill to a CR funding the government past September. But Democrats have little interest in what they call “piecemeal” legislation that doesn’t address the myriad issues facing the economy during the worst downturn in modern history.
At the Republican National Convention this week, speakers generally attempted to paint a rosy picture despite the objectively dire economic straits many Americans currently face.
Thursday’s claims data won’t do much to reinforce that dubious narrative. Last weekend, Goldman projected that around 25% of “temporary” job losses would eventually become permanent in the coronavirus recession.