Hello, I’m Marcie Wright, Managing Director of Private Bank Portfolio Management at Fifth Third Bank, with this week’s Economic Beat.
After a good start for equity markets last week, most U.S. stock indices moved lower the second half of the week. Small cap stocks were the exception—advancing for the sixth consecutive week. Investors saw optimism in news throughout the week, along with the continuation of unresolved news headlines. COVID-19 vaccine news continued to be a bright spot, while observers raised concern over the distribution of the vaccine—paired with news of record COVID-19 cases. Lawmakers did not reach a conclusion on stimulus negotiations and the Senate passed a one-week spending bill last Friday to avoid a possible government shutdown—two important conversations that will continue this week.
In economic news, the release of two inflation measures for November pointed to continued tame inflation amid the COVID-19 pandemic. The Consumer Price Index rose modestly ahead of expectations month-over-month and the Producer Price Index matched consensus estimates for the month.
In other economic news, the NFIB Small Business Optimism release told us small business optimism fell more than expected—posting the second decline in small business optimism since April—although more companies shared that they planned to add jobs in the next three months and 34% of firms stated they have unfilled positions available at this time. The JOLTS reading—Job Openings and Labor Turnover Survey, reported a month in arrears, reflected job openings moved higher in October while quits also went up for the second month in a row. Continuing Jobless Claims rose and weekly jobless claims moved to a three-month high—aligning with new shutdowns as a result of rising COVID-19 cases.
In the week ahead, members of the U.S. Electoral College will meet Monday to vote for the next U.S. President to take office on January 20th, 2021. The Federal Open Market Committee meets on Tuesday and Wednesday. It is widely expected the Fed will vote to leave short-term interest rates unchanged at a range of zero to a quarter of one percent. Observers will be listening for fresh guidance on how the Federal Reserve will utilize specific tools in its toolbox, such as, guidance on continued asset purchases and the potential of extending the average maturity of monthly bond buying. We’ll be watching for several economic releases for November including U.S. Retail Sales—a release that’s expected to be softer than the October reading, Housing Starts and Building Permits will also come out. Building Permits gives us insight into the future construction of new homes.
As always, we’ll be watching and reporting back to you. Thank you.