Inside this Issue:
- More Blowout Tech Profits: But the regulatory monster lurks
- The Jobs Market: Still Far from Healthy
- The Stock Market: Up Again
- The Bond Market: Long Rates Rising
- Amazon: Goodbye Jeff
- Ford: All In on EVs
- ExxonMobil: Dirty Darren’s Fossil Fuel Double Down
- Health Care Costs: Can Technology Help?
- Wall Street Upheaval: Robinhood Under Waters
- Getting Old: America’s Discomforting Demographic Decline
- Debate: Minimum Wage Hike, Good Idea or Bad?
- Chart of the Week: Where are the Jobs?
- A Very Special Guest This Issue: President Chester Arthur
- And This Week’s Featured Place: Boston, The Early Years
*Please view econweekly.biz for a video presentation on the U.S. economy in 2020
Quote of the Week
“Our company’s top priority is the vaccination program.”
–McKesson CEO Brian Tyler
To paraphrase a line from this week’s Economist: It feels like the last stretch of a long-haul flight. When the end seems to be in sight, the waiting is interminable. Americans, sure enough, can see light at the end of the tunnel as vaccine distribution progresses, however slowly. But the Covid plague lives on, preventing the economy from fully recovering. Does the nightmare end this spring? This summer? This fall? Next year? The uncertainty is unsettling.
The jobs market clearly isn’t healthy yet. January’s unemployment rate fell a bit. It’s now 6.3%, according to the latest Labor Department jobs report. But that’s only because more people dropped out of the workforce, a bad sign. No less encouraging are the 4m people officially unemployed for at least 27 weeks.
More encouraging is the heavy concentration of these poor labor conditions in just the leisure and hospitality sector. Here, employment last month was down a striking 23% y/y. Many other parts of the economy are doing extremely well, not least the housing, technology, consumer retail, food retail (supermarkets), manufacturing, logistics and finance sectors (see chart below). Last week again, a parade of corporate giants—Amazon, Google, UPS, PayPal, etc.—trumpeted robust fourth quarter and full-year earnings. Energy behemoths like ExxonMobil have issues. But oil prices are rising at least. Big-time auto firms like Ford face a serious semiconductor shortage. But demand for cars and trucks are at least rising. The massive health care sector still struggles with Covid. But earnings throughout most of the sector are healthy. Government employment, even at the state and local level, is relatively stable excluding education jobs.
Getting people back to schools, restaurants, bars, theaters, amusement parks… therein lies the key to full recovery. The rest of the economy, indeed, is already doing its part. Which begs the question? Does the U.S. need another round of fiscal stimulus? Most in Congress say yes. But Democrats and Republicans differ sharply on how much. Last week’s less-than-stellar jobs report adds fuel to the spend-big argument. Johnson & Jonson’s new one-shot Covid shield, which should speed vaccine distribution, is perhaps a counterargument. Of course, a large chunk of the money President Biden wants to spend would go precisely to vaccine distribution. One prominent critic from Biden’s own party, former Treasury chief Larry Summers, agrees that much of the proposed spending is merited. But not all $1.9 trillion of it.