PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

A Review of this Week’s Data: Numbers and Trends on the Economy

By at 17 July, 2020, 3:42 pm

by Raymond J. Keating-

Data worth highlighting this week provide some information on where the economy has been recently, as well as the direction we might be headed.

Industrial Sector

The Federal Reserve reported that after two big drops in March and April, and no clear growth going back to 2018, industrial production grew for the second month in June. As for manufacturing output, the largest chunk of industrial production, it also grew for the second month in a row after massive declines in March and April, and a decline for all of 2019. The industrial sector, including manufacturing, faces stiff challenges, including misguided protectionist trade policies that raise costs and limit opportunities, but at least we’ve seen a couple of months of growth.

Source: Federal Reserve Bank of St. Louis, FRED

Retail Sales

The Census Bureau noted that retail sales also showed growth in June. As reported:

“Advance estimates of U.S. retail and food services sales for June 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $524.3 billion, an increase of 7.5 percent (± 0.5 percent) from the previous month, and 1.1 percent (± 0.7 percent) above June 2019. Total sales for the April 2020 through June 2020 period were down 8.1 percent (± 0.5 percent) from the same period a year ago.”

The fact that retails sales in June actually were up ever so slightly compared to a year earlier was welcome news. However, this small uptick will prove temporary, reflecting government aid efforts, without real, substantive private sector economic, income and employment growth.

Source: Federal Reserve Bank of St. Louis, FRED

Unemployed

The U.S. Department of Labor estimated that initial jobless claims during the week ending July 11 once again came in at 1.3 million. That basically was unchanged from the previous week, and up from 217,000 during the same period last year.

Meanwhile for the week ending July 4, insured unemployment (continued claims) came in at 17,338,000, compared to 18,062,000 in the previous week. At the same point last year, insured unemployment stood at 1,694,000.

This movement is going in the right direction, but a long, steep climb remains before us.

Housing

The Census Bureau reported that housing starts in June 2020 were up by 17.3 percent compared to May, but down by 2.5 percent versus June 2019. Meanwhile, building permits – a signal of future housing starts – were up by 2.1 percent compared to last month, and down by 2.5 percent compared to a year earlier.

Housing is a measure of both consumer and employment confidence. For good measure, the housing construction business is dominated by small businesses.

Source: Federal Reserve Bank of St. Louis, FRED

State of the Pandemic

The source of our economic woes, of course, has been the coronavirus, and the latest data on the pandemic are not exactly encouraging. For example, the John Hopkins Coronavirus Center, as of the morning of July 17, reported 3,578,593 confirmed cases in the U.S., resulting in 138,384 deaths.

In terms of particular states, as reported by NPR’s state tracking page, average new cases per day this week have moved up markedly in places like Florida (11,865), Texas (9,902), and California (8,889), which ranked highest among the states.

Other states with large daily average new cases are Georgia (3,509), Arizona (3,135), Louisiana (2,060), North Carolina (2,007), Tennessee (1,993), South Carolina (1,913), Alabama (1,702), Ohio (1,324) and Illinois (1,073).

In percentage terms versus two weeks ago, the biggest leaps up in average daily cases have occurred in Montana (173%), Idaho (114%), Oklahoma (91%), Louisiana (77%), Alabama (73%), Virginia (70%), Wisconsin (63%), Kansas (60%), Tennessee (58%), Texas (55%), Washington (51%) and Florida (51%).

As we look ahead, economic growth depends on a host of factors, including vaccines and treatments for the coronavirus; policymaking such as tax, regulatory and trade policies, as well as policies targeted at limiting the spread of the pandemic; and the vitality of U.S. entrepreneurship and investment.

Bad policies can add to the weakness of the economy, and getting the pandemic behind us would obviously help optimism, confidence and growth. Getting additional policy support for small businesses (trimming taxes, regulations and efforts that promote capital access and formation) would provide some relief, and certainly help to set the stage for better economic conditions once COVID-19 fades.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

News and Media Releases