6/18: EconUpdate by P. Duffy

EconUpdate by P. Duffy

Initial unemployment claims rebound 9.9 percent to 412,000

What does this mean?  Although initial claims did jump to the highest level in a month, the long-term trendline is towards lower unemployment levels.

In the week ending June 12, initial unemployment claims were 412,000, an increase of 37,000, or 9.9 percent, from the previous week’s revised level. Continued claims during the week ending June 5 were 3,518,000, an increase of 1,000 from the previous week’s revised level.  The total number of continued weeks claimed for benefits in all programs for the week ending May 29 was 14,828,950, a decrease of 559,873, or 3.6 percent, from the previous week.


May Leading Economic Index rises again to surpass pre-pandemic high

What does this mean?  An unusually strong economic rebound could mean GDP growth of 6.6 percent for 2021.

The Conference Board Leading Economic Index® (LEI) for the U.S. increased by 1.3 percent in May to 114.5, following a 1.3 percent increase in April and a 1.4 percent increase in March, and now stands above its previous peak reached in January 2020 (112.0), suggesting that strong economic growth will continue in the near term. The Conference Board now forecasts real GDP growth in Q2 could reach 9 percent (annualized), with year-over-year economic growth reaching 6.6 percent for 2021.


Federal Reserve keeps rates at current levels, but signals rate hikes could come earlier if higher inflation remains

What does this mean?  Higher GDP growth and inflation in 2021 still expected to taper off by 2022.

The Federal Reserve Open Market Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent, but signaled that it could raise interest rates twice by the end of 2023, a full year earlier than previously estimated.  The Fed also revised its economic projections for the full year of 2021:  GDP growth rose from 6.5 to 7.0 percent, PCE inflation rose from 2.4 to 3.4 percent, and the ‘core’ inflation rate rose from 2.2 to 3.0 percent.