It is time for our long-cherished Labor Day weekend! For most people it now signals the end of summer and maybe an opportunity to host a socially-distanced barbecue. See the history and photos of this holiday here: National Geographic
Unemployment fell to 8.5%, the first reading under 10% since the crisis began. Employers added 1.4 million jobs in August, meeting expectations. Hiring growth has slowed compared to the last three months. Joblessness remains historically high, particularly when compared with a 3.5% rate in February 2020. Private company hiring was a disappointment, but 238,000 temporary Census jobs made a major contribution. (Barron's)
Stocks dropped more than 3% on Thursday, but the S&P 500 is still higher than it was at any time before the pandemic. (Daily Shot)
- This decline is within the expected range, given the low volume and big jump in the market in August.
- It appears to be driven by a day trader options frenzy around tech favorites like Tesla and Apple, as well as a large purchase of individual tech stocks and related options by SoftBank, which is setting up its own hedge fund.
- One-year chart of the S&P 500 index for context:
Manufacturing orders saw solid 6.4% growth in July, exceeding expectations.
Farmers are faring a little better now. Trade with China has improved, particularly in soybeans. In addition, prices rose in August for many goods, such as corn and milk. Government payments to farmers have also been critical to the agricultural sector’s stability. Additionally, labor shortages weren’t as bad as some farmers feared, as the economic downturn pushed some unemployed workers into agriculture. (Marketplace)
Bankruptcy filings in the struggling retail sector are weighing on the economy. (Barron's)
- Well-known brands that have filed bankruptcy: Stein Mart, California Pizza Kitchen, Men’s Wearhouse, Sur La Ta Table, Bravo restaurants, Chesapeake Energy, Chuck E Cheese’s, GNC, Hertz, Diamond Offshore Drilling, Gold’s Gym, JC Penney, J Crew, Neiman Marcus, Pier 1 Imports, and True Religion jeans. Any of these could rise again through reorganization or buyouts.
- Costco and Target are among the few retail bright spots. Both companies are showing double-digit growth vs. last year.
Disruption in goods from China would cause Americans literal pain. Some Chinese people are calling for strategic restrictions on the export of medical products to the U.S., which would dramatically affect American consumers. China manufactures most of the U.S.’s acetaminophen (pain reliever), heparin (anticoagulant), and antibiotics. (Wall Street Journal)
In other news
Social Security is forecast to see a 1.2% cost-of-living increase, which will be welcome news to retirees and other Social Security recipients. Kiplinger
UK government pioneers incentive program for hiring young people. Under the $2.5 billion ‘Kickstart’ program, when a business hires a young person aged 16 to 24 who is currently on unemployment, and that employee stays for at least six months, the business will get $2,000. The goal is to create jobs for entry-level workers. For young workers, research shows that the longer they are unemployed, the worse their long-term pay prospects are. (Marketplace)
The U.S’s newly-expanded eviction moratorium kicks in today. Ordered by the Trump Administration, the moratorium is set to run through December 31, offering legal protections for renters. There are income ($198,000 for MFJ) eligibility requirements and other rules for renters to qualify. (Fortune)
Over a third of executives still have no timeline for reopening their offices. A Conference Board survey found that 35% of executives have no timeline at all, and 39% plan to reopen the first quarter of 2021.
Industries most at risk during this pandemic include apparel and aerospace. A recent McKinsey report visualizes the industries most at risk of different kinds of shocks, including pandemic and environmental change:
Coronavirus cases in the United States are rising, as the country’s short-lived spurt of progress has stalled out. The U.S. confirmed roughly 41,000 new infections per day over the past week, largely unchanged from the week before. Reopened universities appear to be the new virus hotspots. (Axios, COVID Tracking Project)
- Our home state of Ohio saw a 23% increase in new cases this week compared to last week.
- Nationwide testing was up about 5%, to an average of roughly 730,000 tests per day.
- Coronavirus fatigue and depression are real. Here is a site to find help and advice: Pandemic Stress
Election is near: Here's a handy map with the voting timeline for your state. In these pandemic times, make a plan in advance to complete all the necessary steps to vote by mail or in person.
Wishing you a wonderful holiday weekend, and remember our office will be closed on Labor Day.