A big data release today as we saw the first estimate for Q2 GDP, initial and continuing jobless claims, and the Fed’s balance sheet. On the GDP front, we witnessed an annualized contraction of -32.9% for Q2 of 2020. This is an historic contraction with nearly every facet of the economy experiencing a decline. One area of increase of course was federal government spending.
With respect to initial jobless claims, for the week ending 25 July, we witnesses the second consecutive week over week increase. This is the wrong direction, but unfortunately this is not shocking to The Kapital News. Another 1.434 million Americans filed for initial jobless benefits, which was an increase from the previous week of 1.422 million. Continuing claims also moved higher for the first time in several weeks, now resting at 17.018 million Americans. In aggregate, which takes into consideration the various emergency and pandemic related programs, for the week ending 11 July, there were 30.202 million Americans receiving some form of unemployment compensation. This was a decrease from the prior week ending 4 July of 31.804 million. This is moving in the right direction, however, this data lags a couple of weeks. And with the recent set-back(s) in re-openings, this number may very well increase in the coming weeks. There is also the effect of some of these programs potentially coming to an end if Congress does not extend them or create something new. And there remains some distortionary effects on the “true” jobs picture as PPP loans are still being utilized. So, once these loans expire, will these employers retain all of their employees or will the let some of them go (again)? Time will tell.
Lastly, the Federal Reserve’s balance sheet was reduced slightly from the prior week continuing its recent plateauing trend. However, as Jay Powell stated yesterday following the conclusion of the FOMC meeting, that the Fed will continue to do whatever it takes and will continue to buy US Treasuries and mortgaged-backed securities at its current rate. With recent announcements of extension of various emergency facilities and dollar swap lines, and expectations that Congress will soon be passing another $1 trillion plus spending bill, it is reasonable to assume that the Fed’s balance sheet will be moving higher over the coming months. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #GDP #Jobs #Gold #USA #Depression #Recession #Silver #Liberty #Inflation