A collection of articles from Nationwide experts and guest authors about current events impacting the economy and financial markets.
New claims for unemployment insurance continued to fall sharply last week, moving lower by 38,000 to 406,000. This is the sixth decline in the last seven weeks and it leaves the series on track for its most rapid annual drop on record. Roughly one year into this cycle, initial claims are now also remarkably below their level from this same point in the 2009-20 expansion despite having peaked at more than nine times higher in the preceding recession.
It has been a tough run for the euphoria trade of late. Bitcoin was off by more than 50 percent from its mid-April high at one point over the weekend, with many other cryptocurrencies following suit, while NFT sales volumes have similarly plunged from their peak in early March. There have even been some ripples in the red-hot market for physical collectibles; a LeBron James rookie card, for example, sold this week at a nearly 60 percent discount to its price of just two and a half months ago.
The Conference Board's consumer confidence index was largely unchanged in May at 117.2, as the present situation component moved higher while expectations fell. The inflation outlook ticked up and buying plans were broadly lower, but, in another sign of COVID's fading impact on activity, more respondents characterized business conditions as "normal" than at any time in the last dozen years.
The Federal Reserve's latest report on economic well-being shows both the effectiveness of stimulus in offsetting last year's COVID-driven recession and the bifurcating effects of the pandemic itself. Three-quarters of the respondents indicated that they were "at least doing okay" financially last year, in line with the reading for 2019 and tied for the highest mark in the short history of the series. Along these same lines, a record 64 percent of respondents indicated that they could cover an unexpected $400 expense using cash, savings, or a credit card paid off at the next statement. This metric has risen in every year since the survey debuted in 2013, when only 50 percent of adults indicated that they could cover such an emergency.
Initial unemployment claims fell by 34,000 last week to a new 14-month low 444,000. This marks the fifth decline in the last six weeks and takes the four-week moving average down to 504,750, a drop of 151,000 from the survey-week tally in April.
Minutes from the April 27-28 FOMC meeting revealed that "a number of participants" felt that it might be appropriate to begin discussing a plan to taper asset purchases in the months ahead. This is another step toward a more hawkish posture that is likely to continue playing out in the years ahead as the expansion matures and the labor market continues to tighten, an evolution that has also been reflected in the FOMC's dot plot. Four out of 18 participants at the March meeting anticipated hiking rates in 2022 versus just one out of 17 at the December meeting.
