Everything is relative this year

Economic reports last week were mixed. The stunning headline 33.1% gain in third-quarter U.S. gross domestic product stole the show, but it belies the fact that the total dollar value of production is still below the year-end 2019 level. It would take another quarter of average 2% growth to return to that level, indicating a lost year of output.

First-time weekly jobless claims, perhaps the most current economic reading, continued to fall, from 791,000 to 751,000. An improvement for sure, but this is still well above the roughly 215,000 average before the pandemic struck. Continuing claims fell to 7.76 million, but remain nearly five times higher than they were in March.

With coronavirus cases rising to new highs, and no fiscal stimulus achieved, consumers in the most recent Conference Board survey was understandably less optimistic about the future than they were in the prior month’s survey. More than 20% of respondents expect fewer jobs in the next six months, and larger percentages also said they expect business conditions to worsen.

This pull-back in confidence comes after a surprising recovery following the late spring shut-downs, pointing to the somewhat tenuous nature of this economic recovery. Prospects for a virus vaccine remain promising, but elusive, ahead of colder weather forcing more people back indoors.