The longest economic expansion in American history is officially over: The National Bureau of Economic Research declared yesterday that the recession began in February. This was the fastest that NBER has declared any recession since the group began formal announcements in 1979.
Normally, economists define a recession as consecutive quarters of negative growth. But after GDP dropped by about 5 percent during the first quarter, NBER decided not to wait for a second quarter of a contracting economy, although it is widely expected to happen during the second quarter.
One notable thing about this timeline is that the extensive lockdowns due to the COVID-19 pandemic didn't really begin until March. The NBER said that employment, income and spending peaked in February and then fell sharply afterward as the viral outbreak shut down businesses across the country, ending nearly 11 full years of economic growth.
Tuesday, June 9, 2020
Monday, June 8, 2020
The Big Bounce
How's this for a rebound: From the high on February 19 through the low on March 23, the average stock in the S&P fell 39.1 percent. But the average stock in the S&P 500 is now up 54.7 percent since the March 23 low.
There is only one stock in the entire S&P 500 that's down since March 23: the beauty company Coty, and it's down less than 2 percent. There are only eight stocks that aren't up more than 10 percent since March 23, including names like Walmart, Costco, and Kroger.
The average Energy sector stock is up more than 107 percent since March 23, but these Energy stocks are still down nearly 30 percent year-to-date because they fell 60 percent from February 19 to March 23. Consumer Discretionary, Financials, Industrials, and Materials all have average gains of more than 50 percent since March 23rd.
There is only one stock in the entire S&P 500 that's down since March 23: the beauty company Coty, and it's down less than 2 percent. There are only eight stocks that aren't up more than 10 percent since March 23, including names like Walmart, Costco, and Kroger.
The average Energy sector stock is up more than 107 percent since March 23, but these Energy stocks are still down nearly 30 percent year-to-date because they fell 60 percent from February 19 to March 23. Consumer Discretionary, Financials, Industrials, and Materials all have average gains of more than 50 percent since March 23rd.
Friday, June 5, 2020
May's Shocking Jobs Report
Some stunning numbers from the Bureau of Labor Statistics this morning, which is reporting that the American economy added 2.5 million jobs in the month of May. The headline unemployment rate fell to 13.3 percent last month, down from 14.7 percent in April,
Most of this reflects workers who were temporarily laid off returning to their jobs. The number of unemployed who were on temporary layoff fell by 2.7 million in May to 15.3 million, following an increase of 16.2 million in April. Among those not on temporary layoff, the number of permanent job losers continued to rise, increasing by 295,000 in May.
The strongest category: Employment in food services and drinking places rose by 1.4 million in May, accounting for about half of the gain in total employment. This followed steep declines in this sector in April and March, when we lost 6.1 million jobs combined. Construction employment increased by 464,000 in May, gaining back almost half of April's decline. Employment increased by 424,000 in education and health services in May, after a decrease of 2.6 million in April.
Most of this reflects workers who were temporarily laid off returning to their jobs. The number of unemployed who were on temporary layoff fell by 2.7 million in May to 15.3 million, following an increase of 16.2 million in April. Among those not on temporary layoff, the number of permanent job losers continued to rise, increasing by 295,000 in May.
The strongest category: Employment in food services and drinking places rose by 1.4 million in May, accounting for about half of the gain in total employment. This followed steep declines in this sector in April and March, when we lost 6.1 million jobs combined. Construction employment increased by 464,000 in May, gaining back almost half of April's decline. Employment increased by 424,000 in education and health services in May, after a decrease of 2.6 million in April.
Wednesday, June 3, 2020
Rise of the Small Caps
One of the big success stories of the market's comeback has been small-cap stocks. Following a yearslong bear market for small-capsthe Russell 2000 index, which tracks the performance of small-cap stocks, rose 20.9 percent during April and May.
That stretch marked the index's largest two-month percentage gain since 2009. Moreover, it is the best two-month relative performance to the S&P 500 index since February of last year, according to Dow Jones Market Data.
But keep in mind, one factor working in the favor of small-caps' rise is their dramatic underperformance over the past two years. While the S&P 500 consistently reached new heights throughout 2019 and in the first six weeks of 2020, the Russell 2000 still hasn’t regained the record high it set back in August of 2018.
That stretch marked the index's largest two-month percentage gain since 2009. Moreover, it is the best two-month relative performance to the S&P 500 index since February of last year, according to Dow Jones Market Data.
But keep in mind, one factor working in the favor of small-caps' rise is their dramatic underperformance over the past two years. While the S&P 500 consistently reached new heights throughout 2019 and in the first six weeks of 2020, the Russell 2000 still hasn’t regained the record high it set back in August of 2018.
The Post-Lockdown Economy
What will the economy - and our lives - look like after the pandemic? If consumers have to choose between spending a post-coronavirus-lockdown Saturday buying new clothes or at a restaurant having dinner, more will choose shopping. That’s according to a new survey from S&P Global Market Intelligence, which polled 1,250 people between April 30 and May 18.
When restrictions let up, 44 percent of consumers said they planned to head back to stores. But only 31 percent said they’d dine out. After three months, the dine-out result rose to 40 percent.
The thing consumers are most excited to spend on, according to the S&P survey, are professional services like hair salons and spas. More than half of respondents (55 percent) said they were eager to head back for those experiences.
When restrictions let up, 44 percent of consumers said they planned to head back to stores. But only 31 percent said they’d dine out. After three months, the dine-out result rose to 40 percent.
The thing consumers are most excited to spend on, according to the S&P survey, are professional services like hair salons and spas. More than half of respondents (55 percent) said they were eager to head back for those experiences.
Tuesday, June 2, 2020
A Look Back at May in the Market
The S&P 500 Index ended up rising 4.5 percent in the month of May. It is up 36.1 percent since bottoming out on March 23, although overall it's down 5.8 percent for 2020.
These were the biggest gainers among the S&P 500 in May:
These were the biggest gainers among the S&P 500 in May:
- L Brands, up 36.2 percent
- Fortinet, up 29.2 percent
- Dish Network, up 26.5 percent
- Fortune Brands Home & Security, up 26.5 percent
- PayPal Holdings, up 26.0 percent
- Albemarle Corp., up 24.6 percent
- Lowe's, up 24.4 percent
- News Corp., up 23.6 percent
- Dollar Tree, up 22.8 percent
- Oneok Inc., up 22.6 percent
Monday, June 1, 2020
Housing Springing to Life
There are some signs of very healthy life in the housing market, a good marker for the nascent economic recovery. Though the single-family home mortgage purchase index saw a more than 30 percent drop in April when compared to last year, it has reversed its course, according to new data out from the Mortgage Bankers Association.
The index is now up almost 10 percent compared to the same period last year. That indicates not just a rebound but real health in the home purchase market.
Meanwhile, mortgage applications to purchase a home rose 9 percent last week from the previous week and from a year earlier, according to the Mortgage Bankers Association’s index. It was the sixth straight week of gains for that figure, and a 54 percent recovery since early April.
The index is now up almost 10 percent compared to the same period last year. That indicates not just a rebound but real health in the home purchase market.
Meanwhile, mortgage applications to purchase a home rose 9 percent last week from the previous week and from a year earlier, according to the Mortgage Bankers Association’s index. It was the sixth straight week of gains for that figure, and a 54 percent recovery since early April.
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