Weekly Economic Indicator
Welcome to this month's edition of the Macrospective, where we bring you the latest. Stay informed and ahead of the curve with our comprehensive analysis and additional insights to help you navigate the financial landscape with confidence. These categories will help to understand how real GDP has been effected over the past week
1. Initial unemployment insurance claims
July 27, 2023 report
Initial unemployment claims in the United States decreased by 7,000 to 221,000 in the week ending July 22, 2023. This is the lowest level of initial claims since March 2020, before the COVID-19 pandemic began. The four-week moving average of initial claims also decreased by 2,250 to 233,750.
The decrease in initial claims is likely due to a number of factors, including the strong labor market and the ongoing economic recovery. The unemployment rate in the United States is currently at 3.6%, which is the lowest level since February 2020. Additionally, the economy is growing at a healthy pace, and businesses are hiring at a strong rate.
The decrease in initial claims is a positive sign for the labor market and the overall economy. However, it is important to note that the number of initial claims is still elevated relative to pre-pandemic levels. This suggests that there is still some slack in the labor market, and that the unemployment rate could continue to fall in the coming months.
July 23,2023- Yellow Corp. Averts Strike*, Then Prepares for Bankruptcy*
A Week of Wild Ups and Downs
In a wild turn of events, Yellow Corp., one of the largest trucking companies in the U.S., averted a strike on July 23, 2023, by reaching a deal with its drivers in the Teamsters union. The deal included a 10% pay increase and a signing bonus of $2,000. However, just three days later, on July 26, the company announced that it was preparing for bankruptcy citing rising fuel costs and a decline in freight demand as the reasons for its financial problems.
How Did Yellow Trucking Go From Averted Strike to Bankruptcy So Quickly?
Yellow Trucking's bankruptcy filing was a stunning reversal of fortune. Just days earlier, the company had been celebrating an averted strike and appeared to be on the road to recovery. However, a number of factors may have contributed to the company's sudden financial problems.
Rising fuel costs, a decline in freight demand, and a shortage of drivers have all put pressure on the trucking industry. These challenges have led to higher costs and lower profits for trucking companies, and Yellow Trucking was no exception.
In addition, management may have been overly optimistic about its ability to recover from its financial problems. The company may have underestimated the impact of rising fuel costs and the decline in freight demand. The bankruptcy filing could also have been a strategic move by management, who believed that it would be able to emerge from bankruptcy in a stronger position.
The long-term implications of Yellow Trucking's bankruptcy are still unclear. It remains to be seen whether Yellow Corp. will be able to emerge from bankruptcy, but the company's troubled story is a cautionary tale for other trucking companies. Yellow Trucking's bankruptcy may also be a signal of the times to come for the trucking industry.
The bankruptcy filing raises other questions about the future of the trucking industry. It is possible that other trucking companies will follow Yellow Corp. into bankruptcy, and it is also possible that the industry will consolidate as weaker companies are forced to merge with stronger ones.
Here are some key takeaways from Yellow Trucking's bankruptcy:
The trucking industry is facing a number of challenges, including rising fuel costs, a decline in freight demand, and a shortage of drivers.
These challenges have led to higher costs and lower profits for trucking companies, and Yellow Trucking was no exception.
Management may have been overly optimistic about its ability to recover from its financial problems.
The bankruptcy filing could have been a strategic move by management, who believed that it would be able to emerge from bankruptcy in a stronger position.
The long-term implications of Yellow Trucking's bankruptcy are still unclear, but the company's troubled story is a cautionary tale for other trucking companies.
July 25, 2023 - A day of major announcements
Anheuser-Busch parent company AB InBev’s cuts affect less than 2% of the company’s 18,000 U.S. employees (roughly 360 positions), as Bud Light and Budweiser sales tank following the Mulvaney partnership, and as Modelo Especial overtakes Bud Light as America’s highest selling beer.
Christopher Viehbacher, the CEO of Cambridge, Massachusetts, biotech company Biogen, announced the layoffs—affecting roughly 1,000 of its 8,750 employees—in a quarterly earnings report on Tuesday, in an effort to reduce the company’s annual operating expenses by $1 billion by 2025, as part of a larger plan to “invest less in other areas which are no longer growing.”
July 29, 2023 Theaters Announce Layoffs and Cost Cuts as Industry Struggles
Theater chains across the country are announcing layoffs and cost cuts as the industry struggles to recover from the COVID-19 pandemic.
AMC Entertainment, the largest theater chain in the world, said on Tuesday that it would lay off 14,000 employees, or about 10% of its workforce. The company also said that it would close 100 theaters.
Regal Cinemas, the second-largest theater chain, said on Wednesday that it would lay off 5,000 employees, or about 6% of its workforce. The company also said that it would close 30 theaters.
Other theater chains that have announced layoffs and cost cuts include Cinemark, Cineplex, and Marcus Theatres.
The layoffs and cost cuts come as the theater industry is facing a number of challenges. The pandemic has led to a sharp decline in attendance, and the industry is still struggling to attract audiences back to theaters.
In addition, the rising cost of doing business is putting a strain on theater chains. The cost of food and beverage, as well as the cost of marketing and advertising, have all been increasing.
The layoffs and cost cuts are a sign that the theater industry is still in a state of flux. It remains to be seen whether the industry will be able to recover from the pandemic and return to profitability.
2. Continuing unemployment insurance claims
The past week has seen a mixed bag of hiring news. On the one hand, there have been some high-profile layoffs announced, including at companies like Netflix, Coinbase, and Twitter. On the other hand, the number of people receiving unemployment benefits has fallen to its lowest level since the pandemic began.
The latest report on continuing unemployment insurance claims shows that the number of people receiving benefits has fallen to its lowest level since the pandemic began. However, some experts believe that this could be the new normal, given the political, fiscal, and monetary policies in place to control inflation.
The hiring landscape is still very active, with many companies still actively hiring. However, the logistics of placing new hires is still a challenge, as employers and employees continue to grapple with the question of whether to work remotely or on-site.
Remote Work vs. On-Site Work: The Thorny Issue
The issue of remote work vs. on-site work is a thorny one, with employers, management teams, and rank-and-file employees all having different preferences. Some employers believe that remote work is a productivity killer, while others believe that it can save money and improve employee morale. Employees, on the other hand, may prefer the flexibility of remote work, but they may also miss the social interaction of working in an office.
The Future of Work
The future of work is still uncertain, but it is clear that the issue of remote work vs. on-site work will continue to be a hotly debated topic. As the economy continues to evolve, it will be interesting to see how this issue plays out.
Recency Bias and the Myopic Scaling of Unemployment Claims
It is tempting to look at the recent decline in unemployment claims and conclude that the U.S. economy is strong. However, it is important to be aware of the danger of recency bias. Recency bias is the tendency to give more weight to recent events than to events that happened in the past. Myopic scaling is the tendency to focus on a small part of a problem and ignore the larger context.
In the case of unemployment claims, the recent decline is certainly a positive sign. However, the labor market is still recovering from the pandemic. The number of job openings is still below pre-pandemic levels, and there are still some sectors of the economy that are struggling.
The fact that there are still many companies that are actively hiring is a positive sign for the labor market. It suggests that the economy is still growing, and that there are still opportunities for people who are looking for work.
(If you are looking for a job, it's important to stay positive and persistent. There are still many companies that are hiring, and you may just need to do some extra searching to find the right opportunity for you.)
In the case of unemployment claims, the recent decline is certainly a positive sign. However, the labor market is still recovering from the pandemic (not even two years has past since the 1st FDA emergency approved COVID-19 vaccine was administered publicly.) The number of job openings is still below pre-pandemic levels, and there are still some sectors of the economy that are struggling. The U.S. economy is currently facing a number of headwinds, and it is possible that these headwinds could slow down the pace of economic recovery.
The Industries with the Most Continuing Unemployment Claims
The Bureau of Labor Statistics (BLS) recently released data on the number of continuing unemployment claims filed in the United States. The data showed that the industries with the most continuing unemployment claims during the week ending July 15th were:
Transportation and warehousing (860,893 claims)
Retail trade (650,187 claims)
Accommodation and food services (553,818 claims)
Professional and business services (384,420 claims)
Manufacturing (369,721 claims)
These industries are all heavily affected by the economic climate, and they are often the first to be affected by layoffs when the economy slows down. For example, the transportation and warehousing industry is sensitive to changes in consumer spending, while the retail trade industry is sensitive to changes in business investment.
Industry Insights
Let's take a closer look at the industries with the most continuing unemployment claims:
Transportation and warehousing: This industry includes a wide range of businesses, such as trucking companies, freight forwarders, and warehouse operators. The industry is sensitive to changes in consumer spending, as well as to changes in the global economy. For example, when the economy slows down, consumers tend to spend less money on goods, which can lead to layoffs in the transportation and warehousing industry.
Retail trade: This industry includes businesses that sell goods directly to consumers, such as department stores, grocery stores, and clothing stores. The industry is sensitive to changes in business investment, as well as to changes in consumer spending. For example, when businesses invest less in new equipment and inventory, they may lay off workers in the retail trade industry.
Accommodation and food services: This industry includes businesses that provide food and lodging to consumers, such as restaurants, hotels, and bars. The industry is sensitive to changes in consumer spending, as well as to changes in tourism. For example, when consumers spend less money on dining out or traveling, businesses in the accommodation and food services industry may lay off workers.
The industries with the fewest continuing unemployment claims during the week ending July 15th were government, agriculture, forestry, fishing, and hunting, and mining and logging. These industries are less sensitive to the economic climate, and they are often the last to be affected by layoffs.
Overall, the data shows that the number of continuing unemployment claims in the United States is still relatively high. However, there are some industries that are more vulnerable to layoffs than others. If you are looking for a job, it is important to consider the economic climate and the industry you are interested in when making your decision.
It is my belief that markets and all economic environments are complex adaptive systems and recent events do not always tell the whole story.
Unusual Pattern in Unemployment Continued Claims Data
Is this the new normal? The latest unemployment continued claims data shows an unusual pattern when compared to a longer history. The number of continued claims has fallen to its lowest level since the pandemic began, but the year-over-year percentage change in continued claims has remained elevated.
In addition, the Federal Reserve is expected to continue raising interest rates in an effort to combat inflation. This could lead to a slowdown in economic activity, as businesses and consumers become more cautious about spending. Taking away recency biases and the myopic scaling, the long duration chart below suggests that we are either in the eye of a recession storm, or that the government is propping up the labor market with policies that are allowing for higher-than-normal year-over-year percentage changes in continued unemployment claims.
The Potential for a Prolonged Unacknowledged Recession
Should these headwinds persist, it is possible that the economy could enter a prolonged and what I am calling “An Unacknowledged Recession.” This would be a significant development, as the U.S. economy has not experienced a long duration recession since “The Great Recession of 2008-2009.”
If the government is propping up the labor market with policies, it means that they are taking steps to prevent the economy from entering a recession. These policies could include extending unemployment benefits, providing tax breaks to businesses, or investing in infrastructure. This means the current pattern in unemployment continued claims data is the new normal. This means that the labor market is now operating at a higher level of ongoing unemployment than it was before the pandemic.
So it seems the major catalyst is any change in political regimes around the U.S. We know what the Democrats want and we know what the Republicans want. Keep a close eye on state and local elections to see how unemployment insurance policies begin to change would be my macrospective note here.
The Bottom Line
The labor market is in flux. The number of people receiving unemployment benefits is declining, but there are still some challenges. The future of the labor market is uncertain.
On a positive note, there are promising signs:
Overall, the labor market is still recovering from the pandemic. There are some positive signs, but there are also some challenges. It will be interesting to see how the labor market evolves in the coming months and years.
3. Federal taxes withheld
The Internal Revenue Service (IRS) released data on July 29, 2023, showing that the amount of federal income tax withheld from wages and salaries between July 23 and July 29 was $23.7 billion. This represents a decrease of 1.2% from the previous week, and is the lowest weekly withholding amount since February 2023.
The decrease in withholding is likely due to a number of factors, including the fact that many people are taking summer vacations and therefore earning less money. Additionally, the IRS has been issuing refunds to taxpayers who overpaid their taxes in previous years, which has also reduced the amount of withholding.
The lower withholding amount could have a number of implications for taxpayers. For example, it could mean that they receive a smaller refund when they file their taxes next year. Additionally, if their income increases in the coming months, they may have to pay estimated taxes to avoid owing money at the end of the year.
The average weekly withholding amount for the first half of 2023 was $24.2 billion.
The lowest weekly withholding amount in 2023 was $23.3 billion, which occurred on February 10, 2023.
The IRS has not yet released data on the amount of federal income tax withheld for the entire month of July.
Overall, the amount of federal income tax withheld between July 23 and July 29 was $23.7 billion, which represents a decrease of 1.2% from the previous week. This is the lowest weekly withholding amount since February 2023. The lower withholding amount could have a number of implications for taxpayers, including smaller refunds and the need to pay estimated taxes.
4. Same-store sales
5. Consumer Index
Consumer Confidence Improved Again in July
Consumer confidence in the United States improved again in July, rising to its highest level since July 2021. The Conference Board's Consumer Confidence Index® rose to 117.0 (1985=100), up from 110.1 in June.
The increase in confidence was driven by both improved assessments of current conditions and expectations for the future. Consumers were more optimistic about the current business environment and labor market, and they also expected their incomes and financial situation to improve in the next six months.
However, there are some signs that confidence may be starting to plateau. The Expectations Index, which measures consumers' short-term outlook for income, business, and labor market conditions, rose to 88.3 (1985=100) in July, but this was still below the level of 90 or above that typically signals a recession.
Overall, the July data suggests that consumer confidence is still in a healthy range, but it may be starting to level off. This could be a sign that consumers are becoming more cautious about the economy, as they face rising inflation and interest rates.
Here are some key takeaways from the July Consumer Confidence Survey:
Consumer confidence improved in July, but it remains below its peak levels of last year.
The increase in confidence was driven by improved assessments of current conditions and expectations for the future.
However, there are some signs that confidence may be starting to plateau.
Consumers are still optimistic about the labor market, but they are becoming more cautious about the economy overall.
What does this mean for the economy?
The July Consumer Confidence Survey suggests that the economy is still in a good position, but it may be starting to slow down. Consumers are still optimistic about the labor market, but they are becoming more cautious about the economy overall. This could lead to slower spending growth in the coming months.
What should businesses do?
Businesses should monitor consumer confidence closely and adjust their plans accordingly. If confidence continues to decline, businesses may need to scale back their hiring plans or investment.
What can consumers do?
Consumers should continue to save money and pay down debt. They should also be mindful of their spending and make sure they are not overextending themselves.
***Source: July 2023 Consumer Confidence Survey®***
6. The American Staffing Association Staffing Index
Highlights:
After a sharp decline the previous week due to the Fourth of July holiday, staffing employment surged in the week of July 10 to July 16, with the ASA Staffing Index increasing by 7.6 percent to a rounded value of 101.
Some staffing companies listed the holiday as a barrier to further growth, but overall momentum remains positive, showcasing the industry's resilience.
New starts in the 28th week of the year grew 26.1 percent from the prior week, with nearly two-thirds of staffing companies reporting gains in new assignments week to week.
Insights:
The staffing sector made an impressive comeback after the Fourth of July holiday, with a significant surge in employment during the week of July 10 to July 16. The ASA Staffing Index jumped by 7.6 percent, reaching a rounded value of 101. This remarkable increase highlights the industry's strength and adaptability in overcoming challenges.
Despite the positive momentum, some staffing companies faced obstacles during this period. The holiday season was listed as a barrier preventing further growth. However, the overall trajectory indicates a robust and dynamic workforce ready to tackle future demands.
New starts in the 28th week of the year exhibited promising growth, surging by 26.1 percent compared to the previous week. Notably, nearly two-thirds of staffing companies (63 percent) reported gains in new assignments week to week. This surge in new assignments showcases the industry's potential for expansion and the presence of opportunities in the job market.
Industry Stability:
The ASA Staffing Index's four-week moving average remained steady at a rounded value of 98. This stability is a positive sign, providing a sense of predictability and reassurance for businesses and job seekers alike. It reflects the industry's ability to maintain a consistent growth pattern despite challenges.
Context from the Latest Pulse Report:
In contrast to the broader staffing revenue decline of 6 percent reported in the latest Pulse report, the ASA Staffing Index indicates a different story. With a robust 7.6 percent increase in staffing employment, the industry showcases resilience and adaptability in a fluctuating economic landscape. This difference emphasizes the need to consider specific metrics to gain a comprehensive understanding of the sector's performance.
Year-over-Year Perspective:
While staffing jobs in the current week were 5.4 percent below the same period last year, it's essential to recognize the unique challenges posed during the pandemic. Despite this year-over-year dip, the staffing industry has made significant strides in its recovery, and the current figures demonstrate progress and growth.
Temporary and Contract Staffing Employment:
Temporary and contract staffing employment for the four weeks ending July 16, 2023, was 6.4 percent lower than the same period in 2022. However, it's worth noting that this level is still above the prepandemic levels, as highlighted by Tim Hulley, ASA assistant director of research. This insight underscores the industry's resilience and its ability to adapt to changing circumstances.
Impact on the Monthly Employment Situation Report:
The data from this specific week, which includes the 12th day of the month, will play a crucial role in shaping the July monthly employment situation report. The U.S. Bureau of Labor Statistics is set to release the report on August 4, providing a comprehensive view of the current job market conditions.
Real-Time Staffing Employment Trends:
The ASA Staffing Index stands out for its efficiency in providing near real-time insights. Reported just nine days after each workweek, it serves as a valuable tool for businesses and professionals to make informed decisions promptly, keeping them ahead of the curve.
Staffing Employment as a Coincident Economic Indicator:
ASA research has consistently shown that staffing employment is a reliable coincident economic indicator, reflecting broader economic trends. Keeping a close eye on these indicators is essential for understanding the current economic climate and predicting potential developments.
7. Raw steel production
Global steel output remained flat in June 2023, with production falling slightly from May to 158.8 million metric tons. This is down 0.1% from June 2022, but is still in line with World Steel's forecast for 2023 demand. The Chinese steel industry, which accounts for more than 65% of global output, increased its monthly production by 1.1% to 91.1 million metric tons in June. India's steel industry also saw an increase in production, with output rising 12.9% to 11.2 million metric tons. Japanese steelmakers produced 7.3 million metric tons in June, down 1.7% from the previous month. The U.S. industry produced 6.8 million metric tons in June, down 1.5% from May. Overall, global steel output is tracking slightly below World Steel's forecast for 2023 demand. However, falling industrial demand and weak construction activity, and the expectation of economic recession, appear to be limiting steelmakers' expansion efforts.D a
8. U.S. railroad traffic
U.S. Rail Traffic Remains Below 2022 Levels
U.S. rail traffic remains about 3% below 2022 levels, according to the latest weekly statistics from the Association of American Railroads. The level of decline has been more moderate recently, with traffic down 3%, 3.2%, 3.2%, 5.1%, and 2.4% in the five weeks before this.
For the week ending July 22, total U.S. rail volume was 473,736 carloads and intermodal units, a 3.2% decline from the same week a year earlier. That figure included 222,454 carloads, down 1.3%, and 251,282 containers and trailers, down 4.8%.
For the year to date, through 29 weeks of 2023, traffic is down 5.1% compared to the same period in 2022. That includes a 0.4% increase in carload traffic and 9.8% drop in intermodal traffic.
North American totals for the week, from 12 reporting U.S., Canadian, and Mexican railroads, include 330,062 carloads, up 0.4%, and 331,880 intermodal units, down 6.3%. The combined figure of 661,942 carloads and intermodal units is down 3.0%. Through 29 weeks, North American rail volume is down 4.2% compared to the same period in 2022.
The decline in rail traffic is due to a number of factors, including the ongoing COVID-19 pandemic, supply chain disruptions, and rising fuel prices. Despite the decline in traffic, rail remains an important mode of transportation for the U.S. economy. Rail is a more efficient and environmentally friendly mode of transportation than trucks.
Additional Details
The decline in rail traffic is due to a number of factors, including the ongoing COVID-19 pandemic, supply chain disruptions, and rising fuel prices.
Despite the decline in traffic, rail remains an important mode of transportation for the U.S. economy.
Rail is a more efficient and environmentally friendly mode of transportation than trucks.
The decline in U.S. rail traffic is a trend that is likely to continue in the near future. However, rail remains an important mode of transportation for the U.S. economy, and it is likely to remain a major player in the transportation landscape for years to come.
9. U.S. fuel sales to end users
10. U.S. electricity output
U.S. Electricity Output from July 23 to July 29, 2023
The average daily electricity output was 1.362 billion kilowatt-hours (kWh), lower than the weekly average. The highest daily output was 1.414 billion kWh on July 23, and the lowest was 1.274 billion kWh on July 29. The lower output was due to a combination of factors, including warmer weather, increased air conditioning use, and unplanned outages at some power plants. This could lead to higher electricity prices in some areas.
Additional Details
The output was lower than average for the week in all regions of the United States.
The output was particularly low in the Southeast and Southwest regions.
The lower output was due to a combination of factors, including warmer weather, increased air conditioning use, and unplanned outages at some power plants.
This could lead to higher electricity prices in some areas.
Overall, the electricity output from July 23 to July 29 was lower than average due to a combination of factors. This could lead to higher electricity prices in some areas.