Friday Economic Snapshot: Not feeling so confident anymore
With welcome news that the GOP and White House are negotiating a possible breakthrough to at least a portion of the current stalemate, the country’s economic outlook is looking more solid than it did last week.
While government-sourced statistics are still largely MIA during the shutdown, independent economic indicators show a leveling off of the optimism and slow-but-steady growth we’ve seen through much of 2013. With still developing news of a possible breakthrough, the Dow has already risen nearly 300 points approaching Thursday’s closing bell — on course for the second best day this year.
Things are never dull in the world of American politics. Let’s get to this week’s biggest news.
Car sales experienced a hiccup, home sales are showing signs of cooling and it’s no surprise employment statistics are responding in kind. According to the Department of Labor, which is still operating to some degree, seasonally adjusted initial unemployment claims were 374,000. This is a hefty increase of 66,000 from the previous week’s 308,000.
This shifts the four-week moving average to 325,000, which is a jump of 20,000 over last week. Like any indicator, unemployment numbers are always in flux, but it will be very interesting to see how we’re looking in the next few reports.
Also from the no-surprise department comes word that general confidence levels took a major hit during the government shutdown, debt ceiling debacle and affiliated morass.
According to Gallup, consumer confidence dropped by the largest amount since 2008. In a service- and consumer-driven economy like ours, these numbers are of great importance. Businesses owners are also feeling the heat, as the National Federation of Independent Business reports that small-business owner dipped in September.
With the many risks — unprecedented, possibly catastrophic threats to our nation’s credit rating — it stands to reason that next month will continue to show negative impacts even if the Washington logjam breaks.
Not just the shutdown, President Obama is nominating Janet Yellen as the Federal Reserve’s new leader. The consensus in the economic world is that Yellen, currently serving as Vice Chair of the Fed’s Board of Governors, will continue stimulus efforts to move the unemployment needle.
While the possible shutdown settlement story’s still developing as I type, it looks like the GOP will be proposing a short-term debt ceiling increase, kicking the can to late November. At least it’s not a default, and hopefully our representatives can agree to a wider agreement that ends this succession of man-made crises.