The BEA’s second estimate showed an upward revision of 1.2 percentage points…so that real GDP fell by “only” 31.7% on an annual basis instead of the 32.9 stated in the advance estimate. Private inventory investment and personal consumption expenditures (PCE) decreased less than noted in the advance estimate. Note that what “on an annual basis” means is that if GDP fell by as much as it did this quarter (9.1%) for four quarters it would lead to a 31.7% decline for the year. Make no mistake, however, 9.1% is an extremely large quarterly decline. Real PCE
Initial and Continuing Claims
Initial claims (not seasonally adjusted) fell to 822,000 after increasing the previous week. Continued claims fell to to about 14 million.
Personal Income and Outlays
The BEA released personal income and outlays for July with a 0.35% gain to personal income and a 1.92% gain in PCE. The personal savings rate fell to 17.8%.
While the economy continues its slow march back to something like normality, we are certainly not out of the woods, maybe the trees have thinned some though. Moreover, the stock market seems to have ignored the symptoms and the housing market has sprung back as well.
The BLS announced that seasonally adjusted nonfarm payroll employment increased 1,763,000 in July. The increases in May, June and July are the three largest gains in the history of the series that began in January of 1939. Over the last three months payroll employment has increased nearly 9.3 million. Of course March and April set records for declines, 1.4 million and 20.8 million respectively, totaling a loss of 22.2 million jobs. The May numbers were revised up by 26k while June saw a downward revision of 9k.
These reported numbers come from seasonally adjusted data. As mentioned by the BLS, seasonal adjustment accounts for “predictable” seasonal patterns and there is the problem! -COVID-19 is anything but a predictable pattern:
Looking at the not seasonally adjusted numbers reveals an increase in employment of 591,000. The two series were fairly close in March, April, May and June but, at times, may differ, as in January of this year and the latest numbers. Given the very unpredictable event, the not seasonally adjusted numbers may be more revealing.
The seasonal adjustment problem affects not just the Employment Situation Reports, but as we have pointed out the weekly new jobless claims numbers. In those unadjusted data recent months have continued declines in the new claims while the adjusted data show increases. The financial media almost never make the distinction.
Back to the reported seasonally adjusted numbers, service producing jobs accounted for the bulk of the gain, increasing 1.4 million.
Average weekly hours decreased slightly from 34.6 to 34.5. Average hourly earnings increased from $29.32 to $29.39.
The household survey showed an increase in employed persons of 1,350,000 seasonally adjusted (SA) and 1,681,000 not seasonally adjusted (NSA). The labor force participation rate fell from 61.5 to 61.4 (SA) and increased from 61.8 to 62.0 (NSA). The unemployment rate fell almost a full percentage point, from 11.1% to 10.2% (SA) and from 11.2% to 10.5% (NSA). The teenage unemployment rate fell by almost 4 percentage points, from 23.2% to 19.2% (SA). The employment to population ratio increased a half a percentage point, from 54.6 to 55.1. Before the COVID-19 shutdown the employment to population ratio had not seen a change like 0.5 for about 60 years. The magnitudes of all these changes make it very difficult to interpret the underlying condition of the labor market.
