October 5, 2020 — Economic Data: the Good with the Bad


Consumer confidence surged in September, its highest level since March.  Since the consumer is the driving force behind the US economy, higher confidence makes it more likely people will start spending, rather than saving, and the economy will pick up.  It’s felt there is a pent up demand for goods and services, as people put off spending over the summer. It’s hoped, by winter, spending levels will be closer to the average. Strong consumer spending pushed the economy forward in Q3, with GDP rising at annualized rate of 30 percent.

However, uncertainty continues. Employers continue to hesitate to expand or cut back on layoffs, and federal aid is diminishing. Employers added 661,000 jobs in September as the labor market starts to recover, but at a much slower pace than earlier in the summer. September marked the first time since April net hiring was below 1 million. The US has replaced 11.4 million of the 22 million jobs lost in March and April. We have a way to go, and it will be harder to bring back workers in an economy that is slow to recover.

The unemployment rate came in at 7.9 percent last week from 8.4 percent in August, but that number is likely lower due to people leaving the workforce due to childcare issues and weak employment prospects.