The Monday Morning Quarterback 11-9

The bigger jump in the stock market came this morning as news came that Pfizer and BioNTech have had excellent results with its COVID-19 vaccine trials and is preparing for approval and mass manufacturing. A jump in the stock market can be fleeting, but it is a signal of optimism in at least the near-term economic outlook. As we’ve been saying all along, the current and potential future surges in new COVID-19 cases have to be brought under control to get to where we need to go with the economy. Along with continued compliance from the public in terms of distancing, hand washing, and masks, as well as additional therapeutics, and better, quicker and cheaper testing, we have stated time and time again that a credible vaccine will be a critical component to get the economy back on track. Combined with a high household savings rate, pent up demand, and the likelihood of additional stimulus for those whose jobs and income are still affected by COVID, the outlook will be quite positive for the next couple of years at least. The logistics of distributing the vaccine to hundreds of millions here in the U.S. and billions across the world present its own challenges and will delay full recovery. But hopefully we are on the cusp of a significant turnaround.

In terms of the data released last week, the U.S. had a positive jobs report in October with the private sector gaining a substantial number of jobs in several sectors which more than offset losses in government census worker jobs. Worker productivity also increased, though at a lower rate than the previous quarter. Labor costs also declined dramatically. The manufacturing and service sectors both continued to signal expansion, consumer credit increased, and total construction was up from a year ago driven completely by the private sector.

In Arizona, we continue to witness a significant imbalance in home sales and listings which continues to drive the median price of homes upward.

U.S. Snapshot:

• According to the October jobs report, 638,000 jobs were created. This is despite the jobs loss in the Government sector of 268,000 jobs (the majority of which were Census workers).

The job gains were in Leisure & Hospitality, Professional & Business Services, Trade, Transportation, & Utilities, and Construction. Since the job recovery started, 12.1 million jobs have been created. That’s 54% of the jobs lost.

• Productivity continued to increase at annualized rate of 4.9% in the third quarter, though down from the 10.6% seen in the last quarter. Unit labor costs decreased by 8.9%. This is the largest decline since 1993.

• According to the ISM, the service index declined from 57.8 to 56.6 in October. It remains 4.0% above a year ago. The manufacturing index saw a gain of 4.5 to 59.3 and is up 22.3% from a year ago. Crucially, both indices are above the 50 mark which signals expansion for each of the sectors.

• Consumer credit saw an increase of $16.2 million in September. Revolving credit was up $4.0 million following an unexpected decline of $9.7 million in August. Non-revolving credit continues growing and was up $12.2 million from a month ago.

• Total construction was up 1.5% from a year ago. All of the gains were in private construction with a 2.4% increase while public construction was down 1.3%.

Arizona Snapshot:

• According to the Cromford Report, listings were down 23.0% from a year ago with the median sales prices increasing 16.5% from a year ago.7505 East Sixth Avenue, Suite 100
Scottsdale, Arizona 85251
480-423-9200
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