Three Data items today:
#1: The NY Fed’s Weekly Economic Index (WEI) continues to show generally steady improvement in the US economy. The WEI uses a set of high frequency indicators to evaluate American economic output in almost real-time. These include initial/ongoing claims for unemployment insurance, same-store retail sales, steel production, gasoline and electricity usage, and other datapoints.
The Fed chart below shows both the weekly data (blue line) and the 13-week average (tan line). The latest readings are -3.9 percent for the former and -5.6 percent for the latter.
Takeaway: despite occasionally choppy readings, the WEI shows a slow but steady improvement in the US economy ever since the late April lows.
#2: Last Thursday’s Unemployment Insurance Weekly Claims Report showed an unexpected increase of 53,000 new claims on a seasonally adjusted basis and 76,670 when not seasonally adjusted. There have been other weekly increases since May 2020, such as July 18th (+114,000) or August 15th (113,000), so this is not all that unusual. Still, seeing this widely watched measure of labor market conditions moving in the wrong the direction merits a deeper dive into the data.
First, it’s important to note that national data has not included fresh UI numbers for California for a month now.
- Every week’s CA Initial Claims since September 19th has been 226,179, essentially unchanged since May 9th level of 212,667.
- This is due to efforts in the state’s Employment Development Department to develop more robust systems and these efforts have caused a multi-week delay in processing new claims.
- Given that 29 percent of all unemployed Americans receiving UI live in California (at least according to the latest data available), this is a pretty big hole in the data.
Still, we must make the best of what we have, so we looked at Thursday’s UI report to find where the 77,000 actual (non-seasonally adjusted) claims were located. We expected to see upticks perhaps in New York, Florida or Texas, three high population states, but there were only 4,514, 1,097, and 2,489 new claims in each state respectively.
Rather, the epicenters were in the upper Midwest (Indiana +18,788, Illinois +9,805), New England (Massachusetts +9,582), and in the South (Georgia +8,526). Those four states were 61 percent of the entire increase in last week’s Initial Claims, and we don’t think this signals a reversal in the US labor market since continuing claims in these 4 states are all still solidly on the decline.
Here is the state level continuing claims data for each back to mid-March 2020 for a sense of these trends (Illinois in blue, Georgia in green, Massachusetts in red, and Indiana in purple):
Takeaway: we do not believe last Thursday’s uptick in initial claims is the start of a reversal for US labor markets given it centered on states with healthy (lower) overall trends in ongoing claims. We do wonder what the California data will look like when it is released, however, as this entire data set is a bit less useful without the country’s most populous state reporting in a timely fashion.
#3: For readers interested in the intricacies of the upcoming US election, a longtime friend sent us a link to a Bloomberg article with some interesting details for how key “swing” states process mail-in/absentee ballots. A few examples of how differently each jurisdiction handles this:
- Florida, Colorado, Arizona and North Carolina can start counting them at various points between October 12th and October 20th. Texas can start counting on October 30th, but only in counties with over 100,000 people.
- Pennsylvania and Wisconsin can’t process ballots or count votes until Election Day.
- Michigan can do some processing on November 2nd but no vote counting until November 3rd.
- Georgia, Iowa, Minnesota and Nevada can do some processing early, but must wait until November 3rd to start counting votes.
Takeaway: elections are basically data gathering exercises, so we thought you would be interested to learn some of the complexities of the process this year given the expected increase (and potentially decisive nature) of mail-in voting in 2020.