There are two recent economic updates worth mentioning this morning. First, the latest regional employment report from the Bureau of Labor Statistics revealed that the jobs recovery in America remained broad based in August. Specifically, nonfarm employment increased in 40 states last month, and the rate of joblessness declined in 41 states. The latter is a marked improvement from July when the unemployment rate declined in only 30 states. However, clear regional differences still exist, with the rate of joblessness in many parts of the Northeast and out West remaining in the double digits, whereas unemployment continues to generally fall much more rapidly in the South, North-Central, and Mountain states. Overall, though, there is still a lot of ground left to make up because on a year-over-year basis total employment remains down in all 50 states.
Elsewhere, the latest reading on the consumer price index (CPI) from the U.S. Labor Department confirmed that household inflation pressures in America continue to stabilize. This is an encouraging sign that deflation is no longer the imminent risk it was earlier this year, thanks largely to the unprecedented actions by Congress and the Federal Reserve to stave off a more severe demand shock following the economic hit from the coronavirus and related containment efforts. Additional evidence that the reopening is going well can be seen in the prices for apparel, hotels, and air travel, which all continued to rebound last month. A perhaps more interesting development is that the average cost for a used vehicle has surged recently (up 5.4 percent just last month). This reflects a combination of limited supply and a more widespread desire by Americans to avoid close-proximity public transportation, a potentially longer-lasting side-effect of the pandemic. Also of note is that the consumer price index for urban wage earners and clerical workers (CPI-W) rose by another 0.4 percent in August, which means that even if this particular inflation gauge is unchanged in September, Social Security recipients would still receive a cost of living adjustment (COLA) of 1.2 percent next year, a big improvement from what was expected in Q1.
Sources: Econoday, U.S. DoL, FRBSL