A batch of data released on Thursday showed that the US job market and the overall economy continued to rebound, but there were also some minor problems.
From the labor market recovery to the prospects for future growth, there is plenty of data on Thursday to grasp the pulse of the world’s largest economy as it continues to recover from the lockdown and restrictions of COVID-19.
First, the job market.
The U.S. Department of Labor said that the number of Americans who applied for unemployment benefits in various states dropped slightly to 411,000 last week. This is a decrease of 7,000 from the previous week, when they unexpectedly rose.
The previous week’s rise seems to be a flash in the pan-this is good news for job seekers, because weekly unemployment benefits are representative of layoffs.
But there are some controversial disconnects with the US job market. There were 9.3 million unemployed workers in the United States in May, but there were A record 9.3 million job openings.
So what to give?
Many lawmakers blame the state unemployment benefit for the $300 a week federal subsidy because it prevents those unemployed from smashing the sidewalk on the sidewalk and finding a job. This belief led the governors of 26 states to announce that they had opted out of the federal unemployment benefit program, including the federal weekly recharge program.
But many economists believe that there are other factors at play.
First, many companies started to reopen at the same time, which created a bottleneck for certain types of labor. Some people who were unemployed during the coronavirus pandemic may have decided to retire early. The problem of providing childcare services for unemployed workers has persisted, and many daycare centers are still closed. Fear of exposure to COVID-19 may also put the unemployed on the sidelines.
As far as the U.S. Central Bank is concerned, the Federal Reserve has repeatedly stated that it will maintain close to zero interest rates to help Americans return to work, and if necessary, it is willing to tolerate higher inflation for a period of time.
But all this easy money has also led to historically low mortgage rates, which in turn has driven record high prices for both New house and old house in May.
This is because those who are lucky enough to continue working during the pandemic — and put their savings in the rising stock market — have accumulated a healthy down payment for their homes and hope to lock in sweet mortgage deals. The problem they face is the lack of single-family homes to realize the dreams of all those aspiring homeowners.
One of the constraints on housing supply is the soaring cost of construction materials, as economies around the world reopened and consumers woke up from hibernation to release pent-up demand. This creates a bottleneck in the supply chain, which means that the prices of raw materials that play a role in the economy and are returned to consumers are rising.
What does the Ministry of Commerce have to say?
Another report released by the US Department of Commerce on Thursday showed that new orders for goods that were used for three years or longer (ie, “durable goods”) increased by $5.7 billion or 2.3% in May. This jump is largely due to an increase in orders for motor vehicles and commercial aircraft. This bodes well for aviation and air travel that have been hit hard by the pandemic.
Excluding transportation, durable goods orders grew by only 0.3%. Excluding transportation and defense orders, orders actually fell by 0.1% last month.
The decline in core capital goods orders, which represents business investment, may be—you guessed it—the result of a bottleneck.
When companies cannot purchase the products they need domestically, they will import them from abroad.
This helps explain why another report released by the Department of Commerce on Thursday showed that the US’s international trade deficit jumped 2.8% to US$88.1 billion last month, which was US$2.4 billion higher than the April figure. The same report showed that wholesale inventories in May increased by 1.1% from the previous month, while retail inventories fell by 0.8% from April.
The third report of the Department of Commerce also stated that the revised data showed that the US economy grew by 6.4% in the first three months of this year, which was the same as the previous data.
In summary, we find that the US job market and the broader economy are continuing to rebound well, but as companies increase their operations to meet all the needs of consumers, supply is disrupted.
Many economists believe that the national economy is picking up between April and June. The latest GDPNow estimate of the Federal Reserve Bank of Atlanta believes that the economy will grow strongly by 9.7% in the second quarter.