Wednesday, December 23, 2020
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A long-awaited stimulus package tries to offset rising COVID-19 cases.
After months of talk, Congress finally passed a new $900 billion stimulus package late Monday night.
The 5,000-plus page piece of legislation obviously contains all kinds of goodies for all kinds of special interests. But for U.S. consumers struggling during the pandemic, the most important takeaways are the $600 checks that will be sent to millions of workers (and more for families) and an additional $300/week in unemployment assistance.
And just in time, too, as this stimulus comes as the economy enters what is expected to be a challenging winter.
A winter consumers have already started to sour on.
On Tuesday, the Conference Board released its December reading on consumer confidence which showed confidence dropped to 88.6 from 92.9 November. This reading also fell well short of economists’ expectations for a reading of 97.
“Consumers’ assessment of current conditions deteriorated sharply in December, as the resurgence of COVID-19 remains a drag on confidence,” said Lynn Franco, senior director of economic indicators at The Conference Board.
“As a result, consumers’ vacation intentions, which had notably improved in October, have retreated. On the flip side, as consumers continue to hunker down at home, intentions to purchase appliances have risen. Overall, it appears that growth has weakened further in Q4, and consumers do not foresee the economy gaining any significant momentum in early 2021.”
A new stimulus package, of course, will not in itself change the trajectory of COVID-19 cases here in the U.S.
Lawmakers nationwide have cautioned against indoor gatherings during the holiday season. But if the post-Thanksgiving surge in COVID-19 cases is anything to go by, the early weeks of January following Christmas could be challenging and continue to curtail confidence in the recovery.
And while vaccinations have begun in the U.S., the two vaccines currently approved require a two-dose regimen. No one has yet completed the their full course of treatment. And so we are still a few months away from the full force of the vaccine reaching large chunks of the population.
Back in November, we argued that breakthroughs on the vaccine front made the case for economic stimulus clear. Consumers needed to be tided over until a wider range of economic activities could safely resume.
And so with financial aid now en route to many U.S. households, perhaps consumers will more widely follow guidance from health experts to stay home and help slow the spread of COVID.
Which is, after all, the point of this stimulus — to help people make ends meet while staying safe and staying home.
What to watch today
7:00 a.m. ET: MBA Mortgage Applications, week ended December 18 (1.1% during prior week)
8:30 a.m. ET: Initial jobless claims, week ended December 19 (880,000 expected, 885,000 during prior week)
8:30 a.m. ET: Continuing claims, week ended December 12 (5.560 million during prior week)
8:30 a.m. ET: Durable goods orders, November preliminary (0.6% expected, 1.3% in October)
8:30 a.m. ET: Non-defense capital goods orders excluding aircraft, November preliminary (0.8% during prior month)
8:30 a.m. ET: Non-defense capital goods shipments excluding aircraft, November preliminary (2.4% in October)
8:30 a.m. ET: Personal income, November (-0.3% expected, -0.7% in October)
8:30 a.m. ET: Personal spending, November (-0.2% expected, 0.5% in October)
8:30 a.m. ET: Core personal consumptions expenditures month-over-month, November (0.1% expected, 0.0% in October)
8:30 a.m. ET: Core personal consumptions expenditures year-over-year, November (1.4% expected, 1.4% in October)
9:00 a.m. ET: FHFA House Price Index month-over-month, October (0.5% expected, 1.7% in September)
10:00 a.m. ET: University of Michigan Sentiment, December final (80.9 expected. 81.4 in November)
8:30 a.m. ET: Paychex (PAYX) is expected to report adjusted earnings of 66 cents per share on revenue of $954.06 million
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