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Daily Economic Commentary

A collection of articles from Nationwide experts and guest authors about current events impacting the economy and financial markets.

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Daily Economic Commentary

Claims fall sharply

Initial unemployment claims were much better than expected last week, falling by 111,000 to a three-month low 730,000. The caution here is that this has been an extremely volatile and revision-prone series of late, but these numbers ring true against a backdrop of a falling COVID infection rate, loosening government restrictions, and improvements in other high-frequency labor market metrics. Online job postings, for example, have recently soared, rising by more than 30 percent since the end of 2020, while the number of respondents to the Census Bureau's household survey expecting a loss of employment income has plunged by close to 25 percent over roughly the same time frame. The soft patch in the both the labor market and the economy at large looks very much to be at an end. 

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Daily Economic Commentary

Powell maintains a dovish stance

Federal Reserve Chair Jerome Powell wrapped up his semiannual congressional testimony yesterday with another explicit signal that monetary policy will remain highly accommodative for some time to come. Powell noted in his prepared remarks that the economy is a long way from the Fed's goals and answered repeated questions on inflation by stressing that any forthcoming surge is likely to be transitory. He added that "it may take more than three years" for annual price increases to sustainably hit the 2.0 percent target. 

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Daily Economic Commentary

Confidence rises again

Consumer confidence moved higher for a second straight month in February with a 2.4-point increase to 91.3. Details were weaker than the headline, however, as the expectations component fell and buying plans were broadly lower. More encouragingly, the number of respondents characterizing jobs as plentiful exceeded those saying that jobs are hard to get for the first time in three months. The nascent improvements in the labor market, then, are beginning to register and should increasingly impact confidence more generally as they inevitably gather steam in the months ahead. 

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Daily Economic Commentary

Rising Treasury yields far from a red flag

The sell-off in long-term Treasuries continued yesterday, as the 10-year yield rose for the 14th time in the last 18 sessions to hit its highest level since last February. The benchmark long-term yield is now up by more than 80 basis points since the summer, an increase pronounced enough to raise some concerns about the impact on the economy and risk assets. However, it would be unusual for yields to continue climbing unabated in the absence of monetary tightening. 

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Daily Economic Commentary

Claims back on the climb

New claims for unemployment insurance unexpectedly rose by 13,000 last week to 861,000. After an upward revision to previously released data, this marks the first time since last March that the series has gone three consecutive weeks without a decline. Still, this run looks like an outlier against a broader trend of labor market improvement. In recent weeks, expected job losses have fallen substantially, online job postings have surged, and the employment components in the regional manufacturing surveys have ticked higher from already healthy levels (the Philadelphia Fed's employment index, in fact, notched its loftiest reading since mid-2018 this morning).