» REPLAY | DE | Monthly | Employment Conference Call | DE | Monthly | Employment Conference Call | Labor Market, Economy, Fed Amid COVID-19 Increased Risk – 09/03/21 Decision Economics

REPLAY | DE | Monthly | Employment Conference Call | DE | Monthly | Employment Conference Call | Labor Market, Economy, Fed Amid COVID-19 Increased Risk – 09/03/21

Posted September 3, 2021 by rvillareal

Labor Market, Economy, Fed Amid COVID-19 Increased Risk

Both Hiring and Not Hiring; Still “Army of Unemployed?”

  • Labor Market in Late Summer with COVID Increased Risks—Strong?  Weak?  Mixed?
    • Jobs (Nonfarm Payrolls); Unemployment and the Unemployment Rate (Household Survey); Wage Inflation
    • Special Factors—Seasonal; COVID-19 Resurgence; Hurricanes Both Hiring and Not Hiring; Still “Army of Unemployed?”
  • DE Basic Prospect “Boomlet and Expansion” (75% Odds)
    • 2021-23—Growth, Inflation, Unemployment, Profits (S&P 500 Op. EPS)
    • Themes—1) Sustained Expansion; 2) Higher Inflation But Not Acceleration; 3) Sticky-High Unemployment; 4) Fed Emphasis “Full Employment” vs. “Inflation”; 5) Macro Fundamentals Positive for Expansion
    • Risks—COVID-19; Inflation Acceleration—Too Much of A Good Thing (10% to 15%); Underperformance (5%); Recession (5%)
  • Fed and Monetary Policy—Breaking Historical Rules
    • Tapering—On the Way; Powell Commentary
    • Funds Rate Hike Timing—Uncertain
    • Main Goal—Full Employment Not Price Inflation
    • Inflation “Transitory?”
  • Fiscal Stimulus—Unprecedented Even for 1930s and W.W. II
    • $5.9 Trillion in 2020-21 and $600 Billion Traditional Infrastructure on Tap—A Spend-and-Tax Future?
    • $6.5 Trillion Biggest Stimulus Ever Including W.W. II
    • $3.5 Billion Biden Budget—Spend-and-Tax
  • Earnings and Equity Market Valuations
    • S&P 500 Fair Value and Ranges—4600+
    • Downside on Consensus Earnings but Above 4300
    • Upside—Looking to 2023—5200 plus; For 2022, 5000?
  • Note—Midterm Elections, Federal Budget, and “Human Infrastructure” Potential Negatives for a Deficit and Debt-Crisis?