04 Sep September 4, 2020
Week in Review
Employment
The U.S. economy added 1.37 million jobs in August, slightly above expectations and down from 1.76 million jobs in July. The unemployment rate dropped to 8.4%.
Our Take: The U.S. labor market continues to recover from the massive job losses earlier in the year, but the rate of job gains continues to slow. Employment remains well below pre-pandemic levels, and so the economy will need to see many more months of continued strong employment gains in order to support a continued economic recovery.
Municipals
California issued $2.6 billion in general obligation bonds this week. While the ratings agencies have a stable outlook on California, S&P released a warning prior to the sale indicating that the outlook could be revised or lowered “should reserves drop to the point where liquidity is stressed, or the state experiences undue political difficulty in making necessary budget adjustments when addressing its projected sizable budget gaps in fiscal 2022 and beyond.”
Our Take: California spent years building up reserve funds and had benefitted from a budget surplus. The pandemic along with recent wildfires have put an immediate strain on the state’s finances. Looking ahead, the timeframe of California’s economic recovery from the pandemic will determine if budget cuts or additional borrowing will be necessary.
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.