The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

Quick — tell the President!

08/07/2020

The stock market can handle bad news, but it hates surprises.  No economic data is more closely watched than the monthly “Jobs Report” issued by the Bureau of Labor Statistics on the first Friday of each month.  It is always a comparison against expectations.  If the data is better than expected, the market will go up.  Usually, expectations are in a narrow range.

Expectations for the July report issued today ranged from a loss of 500 thousand jobs to a gain of 3 million, with an average estimate of 1.5 million jobs being created.  That 3.5 million range is the widest range I have ever seen and reflects the recent volatility caused by the pandemic.  Wall Street was holding its breath! 

It was a relief when the report showed by 1.76 million jobs were created last month.  Whew!  Also, the unemployment rate dropped from 11.1% to 10.2%, which is good news.  The average hourly earnings didn’t drop and actually increased slightly, which is more good news.

Of course, total employment is still down about 12.8 million from February.  It is a deep hole, but July was a step in the right direction.  The greatest risk to ongoing economic progress is the continuing increase in Covid-19 infections.  

People who will not wear face masks are a direct threat to the economy and the stock market.  Quick, somebody tell the President!!

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