04 Jun June 4, 2021
Week in Review
Employment
559,000 jobs were added to nonfarm payrolls in May. The unemployment rate fell from 6.1% to 5.8%. Average hourly earning rose 0.5%. The labor force participation rate fell to 61.6% from 61.7%.
Our Take: The economy is booming but employment is not recovering as quickly as expected. May marks the second consecutive month that nonfarm payroll growth has disappointed. One challenge has been the reluctance, for a variety of reasons, of the unemployed to return to work. While continued job gains are likely, the pace of those gains may be slower than desired. A return to full employment is a needed component of future economic growth, especially once the sugar rush of stimulus ends.
Municipals
Illinois lawmakers approved a $42 billion budget for the next fiscal year. Governor JB Pritzker is expected to sign the budget bill. The budget bill passed in the Democrat-controlled legislature as Republican lawmakers remain critical of the budget plan and spending. The budget bill does not include tax hikes for individuals but includes $600 million in tax increases for Illinois businesses. However, the budget also includes $570 million in federal COVID-19 relief funds for small businesses.
Our Take: Illinois’ fiscal health is improving. The state is expecting an increase in revenue and an influx of federal aid. In addition, the state continues to rebound from the pandemic and plans to fully reopen on June 11. This is good news for the state with the nation’s lowest credit rating.
Penultimate Reinhart Week in Review
On June 14, the Reinhart Fixed Income Team will become part of Madison Investments. The authors of the Week in Review will not change, but from that date forward the publication will come from Madison rather than Reinhart.
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.