RETAILING

Jobless Claims Rise Sharply The number of workers seeking unemployment benefits climbed to 853,000 last week, an indication layoffs remain at a high level nearly nine months into the pandemic.

(…) Claims had held between 700,000 and 800,000 a week since mid-October, before jumping up last week. Economists caution that week-to-week data can be volatile around holiday periods. (…)

Just more than 19 million continuing claims were filed for all programs for the week ended Nov. 21, including two pandemic-relief programs Congress established earlier this year. That measure, which isn’t adjusted for seasonality, fell by 1.1 million from the prior week.

Those pandemic programs—one for gig workers and others not typically eligible for jobless benefits, and another for those who have exhausted eligibility for other programs—are set to expire at the end of the year. People in the pandemic programs accounted for most of those receiving benefits last month.

Data: U.S. Department of Labor, FRED; Note: Unadjusted; Chart: Axios Visuals

U.S. Consumer Price Index & Core Prices Resume Increase

The Consumer Price Index rose 0.2% (1.2% y/y) during November following no change in October. A 0.1% improvement had been expected in the Action Economics Forecast Survey. The CPI excluding food & energy also rose 0.2% (1.6% y/y) last month, also after stability in October. A 0.1% gain had been expected.

Goods prices excluding food & energy edged 0.1% higher (1.4% y/y) after a 0.2% October decline and increases between 0.7% and 1.0% during the prior three months. The 1.4% y/y increase compares to y/y price declines from January through July. Home appliance prices jumped 2.2% last month and the 6.1% y/y gain was improved from -2.1% y/y in January. The cost of household furnishings strengthened 0.9% (2.9% y/y) following two straight months of decline. Apparel prices also firmed 0.9% but fell 5.2% y/y. Prices for education & communication goods increased 0.4% (-4.3% y/y) following two months of negative readings. Recreation goods prices rose 0.3% (-1.0% y/y) following two straight months of decline. To the downside, used car & truck prices fell 1.3% (+10.9% y/y) and new vehicle costs dipped 0.1% (+1.6% y/y). Medical care product costs fell 0.3% (-1.1% y/y) after weakening during the prior four months. That compared to a 2.5% increase during all of last year.

Services prices rose 0.2% (1.7% y/y) last month after improving 0.1% in October. Education & communication prices held steady but strengthened 2.4% y/y. Tuition costs rose 0.2% (1.3% y/y). Medical care service prices eased 0.1% and the 3.2% y/y rise compared to 6.0% y/y as of June. Shelter costs rose 0.1% and by a greatly lessened 1.9% y/y. The owners’ equivalent rent of primary residences held steady and gained 2.3% y/y. To the upside, recreation services prices strengthened 0.5% (2.6% y/y) following a 0.7% strengthening. The cost of public transportation jumped 2.5%, strong for the third straight month, but fell 12.0% y/y.

The November PMI surveys were pretty worrisome on inflation:

On the price front, [manufacturing] input prices increased markedly and output charges rose at the fastest pace for over two years as firms sought to pass these higher costs on to customers.

Service providers registered a substantial rise in input prices during November. Anecdotal evidence attributed the marked increase to supplier price hikes and greater costs for PPE. The rate of input price inflation was the quickest on record. Firms sought to pass on higher input costs to clients through an accelerated increase in selling prices. The rise in output charges was the sharpest since the series began over 11 years ago.

But there were few signs of pass through to the end consumer, at least just yet. Inflation on core goods stalled in the past 2 months and Services prices are up 1.2% annualized since September after jumping 4.5% a.r. in the previous 3 months.

The Cleveland Fed’s Median and 16% trimmed mean CPI measures are also very subdued:

The Atlanta Fed’s Sticky and Flexible price measures are also very quiet:

Even grocery prices have calmed down:

• Goodbye Covid, Hello Inflation? The timing of the vaccine rollout could make things awkward for the Federal Reserve

(…) A big reason the year-over-year inflation readings are low now is that there was a dip in prices in March through May, when the Covid crisis first struck. Come next March, that shock will start reaching its first anniversary, and the year-over-year comparisons will appear souped-up as a result. If over the next half year prices on a monthly basis rise by just half as much as they did in November, for example, the Labor Department’s headline inflation measure would be up 2.6% on the year by May, with core prices up 2.3%.

But the cycling out of last year’s inflation dip won’t be the only thing going on next spring. By then millions of Americans will likely have been vaccinated against the coronavirus, relaxing safety measures just as warm weather returns. The likely result is a surge in demand, particularly in services categories such as travel. (…)

Maybe, but no such signs just yet…especially if demand gets weaker before it gets stronger. From Goldman Sachs:

November retail sales were likely depressed by a confluence of negative factors: waning fiscal support, pandemic-driven declines in mall traffic, and a high hurdle for sequential growth in ecommerce following outsized gains earlier in the year. Using anonymized bank account data from Cardify, we find a clear drag on spending from the lapse in fiscal support, with November aggregate spending growth lagging among individuals previously receiving unemployment insurance (-7% in November mom sa, compared to +3% for all other households in the sample). (…) Taken together, we estimate a 0.3% decline in retail control and a 0.6% drop in the ex-auto ex-gas category, reflecting reduced dining activity. We estimate -0.9% and -0.6% for the headline and ex-auto measures, respectively.

U.S. Renters Could Owe $70 Billion Between past due rent, late fees and unpaid utility bills, Americans may collectively owe $70 billion by January, when the current federal eviction moratorium is set to expire.

(…) Back rent owed by struggling U.S. households — about 11.4 million renters in all — averages about $6,000 per household, or around three-and-a-half months’ rent, according to Mark Zandi, chief economist for Moody’s Analytics. Most of it has accrued since the expanded unemployment benefits under the CARES Act expired over the summer. (…)

If the total for rent in arrears is closer to the $70 billion estimate, that’s a meaningful but not overwhelming figure in terms of the economy, Zandi says: about 0.4% of GDP. “The wild card, from a macro perspective, is what these evictions do to consumer sentiment,” he says. “If people recognize that the government will not be there to support them if they lose their job, even if you have a job and have a home, that has to be disconcerting. People might grow more cautious.” (…)

GOP See Bipartisan Group’s Covid-Aid Effort Falling Short Top Senate Republicans signaled they wouldn’t accept a bipartisan group’s efforts to craft a compromise on state and local governments and liability protections during the pandemic.

N.Y. Flirts With Covid Record After Months of Controlling Cases The state reported 10,600 new cases Wednesday, according to Covid Tracking Project data.

(…) Still, the pandemic looks much different now than it did eight months ago, when sirens echoed through empty Manhattan streets. The number of patients hospitalized statewide, though rising, is about a quarter of what it was in April when coronavirus overwhelmed the health-care system. Patients are spending less time in the hospital, and less often require intensive procedures like intubation. Thanks to more sophisticated treatment, the virus is killing less often. (…)

New York City is driving the state’s spike, accounting for more than a quarter of new cases, with hot spots in Staten Island and the western end of Rockaway Peninsula in Queens. The Mohawk Valley and the Finger Lakes are reporting the highest new infection trajectory when scaled for population.

NY STATE

USA

CDC Director Robert Redfield said at a CFR virtual event: “[P]robably for the next 60 to 90 days, we’re going to have more deaths per day than we had at 9/11 or we had at Pearl Harbor.” (Axios)

United Airlines flight attendants raise alarm on crew quarantine protocols United Airlines is telling some flight attendants whose colleagues test positive for COVID-19 to keep flying and monitor for symptoms

• China Tells Cabin Crew to Wear Diapers on Risky Covid Flights

U.S. Household Net Worth Hits Record in Third Quarter Household net worth grew 3.2% to $123.52 trillion, according to Fed’s Flow of Funds report, as growth in household debt rose 5.6%, its fastest pace in at least two years.

(…) Only about 15% of American households held stocks directly at the end of 2019, according to Fed data. About half of households owned retirement accounts, such as 401(k) and IRA accounts, with a median value of $65,000. (…)

Airbnb Stock Price Skyrockets in Market Debut as IPOs Boom The stock began trading at $146 on the Nasdaq Stock Market, higher than its initial-public-offering price of $68 a share. It closed slightly lower than its opening price at $144.71.

Data: FactSet; Chart: Sara Wise/Axios

AI software company C3.ai went public this week — priced at $42 per share (already higher than its upwardly revised IPO range). It opened on Wednesday at $100 and finished 120% higher. Yesterday it closed up another 40%.

Xi Ramps Up Control of China’s Private Sector The push is driven by a deepening conviction within the country’s leadership that markets and entrepreneurs are not to be fully trusted. “The market-reform camp is all but gone,” says one economist.

China’s most powerful leader in a generation wants even greater state control in the world’s second-largest economy, with private firms of all sizes expected to fall in line. The government is installing more Communist Party officials inside private firms, starving some of credit and demanding executives tailor their businesses to achieve state goals.

In some cases, it is taking charge entirely of companies it regards as undisciplined, absorbing them into state-owned enterprises. (…)

The risk for China is that Mr. Xi’s vigorous assertion of statist prerogatives will dull the kind of innovation, competitive spirit and unbridled energy that powered China’s explosive growth in recent decades. The economic policies that helped nurture e-commerce giant Alibaba Group Holding Ltd., tech conglomerate Tencent Holdings Ltd. and other global success stories seem to be at an end, say economists inside and outside China. As a result, they say, Chinese companies are becoming less like American ones, which are driven by market forces and depend on private innovation and consumption. (…)

The amount of capital input needed to generate one unit of economic growth has nearly doubled since 2012, when Mr. Xi rose to power, according to the China Dashboard, a data project between research firm Rhodium Group and the Asia Society Policy Institute, a think tank. That is partly because China’s state-owned enterprises, which have swollen in size, are often less productive than private businesses, official data shows. (…)

“State-owned enterprises must play a leading role and important influence on the healthy development of private enterprises,” says a new central-government action plan for the next three years, which calls for more mergers between state and private firms. (…)