09 Apr April 9, 2021
Week in Review
Employment
On Good Friday March nonfarm payrolls were reported to have increased by 916,000 jobs. Revisions to the previous two months added an additional 156,000 jobs. Reported unemployment fell to 6.0% from 6.2%. Average hourly earnings fell 0.1%, as lower paid sectors were the primary beneficiaries of the job growth. The labor force participation rate rose from 61.4% to 61.5%. This week initial jobless claims for the week ending April 3 unexpectedly rose from 728,000 to 744,000.
Our Take: Employment surged in March, in large part due to the continued reopening of the economy and to increased demand fueled by government stimulus. The gains are welcome and should hopefully continue as more of the population is vaccinated and the country continues on its path of a return to “normal.” The rise in jobless claims, however, reinforces the fact that that path may be a little bumpy, while large numbers of workers remaining unemployed means we still have a long way to go.
Inflation
Producer prices jumped 1.0% in March, exceeding economists’ estimates. Year-over-year, producer prices have risen 4.2%.
Our Take: There is definite concern over rising inflation in the wake of unprecedented economic stimulus, and this week’s PPI report will do nothing to abate those concerns. Producers are being faced with the dual challenge of increased demand and supply chain problems affecting their ability to meet that demand. Next week’s consumer price index report should show whether the higher prices that producers are facing are flowing through to end consumers. Inflation could be further exacerbated by the most recent stimulus checks, which likely did not hit consumers’ accounts in time to affect March spending.
Fed Minutes
This week the Fed released the minutes from its March FOMC meeting. As expected, the minutes show the Fed’s continuing commitment to its accommodative policy as the economy recovers from the effects of the pandemic. The minutes provided no indication of a plan for the removal of policy support should growth or inflation exceed expectations. In fact, members noted substantial further progress is needed before the current policy changes.
Our Take: There were no surprises in the FOMC minutes. The Fed continues to support the economic recovery and will likely maintain its easy policy stance for the foreseeable future.
Municipals
Moody’s Investors Service upgraded Connecticut’s bond rating from A1 to Aa3. Moody’s cited the state’s growing reserves as one of the reasons for the upgrade. In addition, Connecticut has experienced higher-than-expected tax collections. This marks the state’s first credit upgrade since February 2001.
Our Take: Connecticut’s finances have continued to improve amid the pandemic. The state’s rainy-day fund has swelled to close to $3 billion. The state is also expected to receive $2.6 billion from President Biden’s rescue plan. Connecticut’s borrowing costs may decrease as a result of the upgrade.
All expressions of opinions are subject to change without notice in reaction to shifting market conditions. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities and should not be relied on as financial advice.