CFNAI Further Rebounds, Led By Production and Employment
The Chicago Fed National Activity Index (CFNAI) rose to 4.11 in June from 3.50 in May, fueled again by improvements in production- and employment-related indicators. The second month of better than expected results indicate economic growth rebounded strongly post-shutdown.
The CFNAI is a weighted average of 85 indicators of growth in national economic activity derived from four broad categories: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories.
Three of the four broad categories of indicators used to construct the index made positive contributions in June. Two of the four categories increased from May. The index’s three-month moving average, CFNAI-MA3, rose to –3.49 in June, up from –6.36 in May.
The CFNAI Diffusion Index — also a three-month moving average — rose to a neutral value in June from –0.45 in May. Fifty-four (54) of the 85 individual indicators made positive contributions to the CFNAI in June, while 31 made negative contributions. Fifty-one (51) indicators improved from May to June, while 34 indicators worsened.
Of the indicators that improved, 14 made negative contributions.
Most Small Business Owners Continue to See Short-Lived Recession
Washington, D.C. (PPD) — The Small Business Optimism Index rose strongly 6.2 points in June to 100.6, up from 94.4 and beating the consensus forecast. Eight of the 10 index components in the NFIB index improved and small business owners continue to expect the recession to be short-lived.
Forecasts ranged from a low of 92.0 to a high of 99.0. The consensus forecast was 96.7. Hiring plans doubled from 8 to 16 and business conditions rose from 34 to 39 after falling to 5 at the height of the shutdown.
“Small businesses are navigating the various federal and state policies in order to reopen their business and they are doing their best to adjust their business decisions accordingly,” said NFIB Chief Economist Bill Dunkelberg. “We’re starting to see positive signs of increased consumer spending, but there is still much work to be done to get back to pre-crisis levels.”
Worth noting, access to capital is not a serious problem, which the NFIB attributed to the popularity of the Paycheck Protection Program (PPP). Only 3% of owners reported that all their borrowing needs were not satisfied, unchanged from May. Thirty-four percent (34%) said all their credit needs were met and 54% said they were not interested in a loan. A net 3% reported their last loan was harder to get than in previous attempts.
As People’s Pundit Daily (PPD) previously reported, the Small Business Administration (SBA) reported the Paycheck Protection Program (PPP) saved more than 50 million jobs. With small businesses employing 59.9 million across the country, that represents upwards of 84% of all their employees.
However, the post-pandemic shutdown sentiment has seen a return to the skills gap as the top labor market issues. Nineteen percent (19%) of small business owners said “finding qualified labor” was their top business problem.
Washington, D.C. (PPD) — The U.S. Labor Department (DOL) reported initial jobless claims fell more than expected to 1,314,000 for the week ending July 4, a decrease of 99,000. The previous week was downwardly revised (-14,000) to 1,413,000.
Claims soared due to the mitigation efforts to slow the spread of the coronavirus (COVID-19), though have now declined for the fourteenth straight week. Forecasts ranged from a low of 1,150,000 to a high of 1,430,000. The consensus forecast was 1,375,000.
The 4-week moving average was 1,437,250, a decrease of 63,000 from the previous week’s downwardly revised average (+3,000) at 1,500,250.
Roughly 51 million Americans filed initial claims for unemployment benefits as a result of the efforts to slow the spread of coronavirus (COVID-19). However, tens of millions now have returned to work given monthly employment situation statistics and lagging data.
The Small Business Administration (SBA) reported on Monday the Paycheck Protection Program (PPP) saved more than 50 million jobs. With small businesses employing 59.9 million across the country, that represents upwards of 84% of all their employees.
Lagging Jobless Claims Data
U.S. initial jobless claims graph on a tablet screen. (Photo: AdobeStock)
The advance seasonally adjusted insured unemployment rate was 12.4% for the week ending June 27, down from the previous week’s rate, which was revised down by 0.3 from 13.2 to 12.9%.
The insured unemployment rate hit the first high of the current crisis at 8.2% for the week ending April 4. The all-time high prior to that was 7.0%, recorded in May of 1975. On April 11, it rose to 11.0% and 12.4% on April 25.
Under the Trump Administration, this rate had fallen to an all-time low 1.1% and remained at 1.2% just weeks ago, as recently as March 14. But that was before coronavirus (COVID-19) mitigation efforts.
The advance number for seasonally adjusted insured unemployment during the week ending June 27 was 18,062,000, a decrease of 698,000 from the previous week’s revised level. The previous week’s level was revised down by 530,000 from 19,290,000 to 18,760,000.
The 4-week moving average was 19,085,500, a decrease of 636,000 from the previous week’s revised average. The previous week’s average was revised down by 132,500 from 19,854,000 to 19,721,500.
Extended Benefits were available in all 50 states during the week ending June 20.
The highest insured unemployment rates in the week ending June 20 were in Puerto Rico (25.4), Nevada (20.8), Hawaii (20.7), the Virgin Islands (17.5), New York (17.1), California (16.7), Louisiana (16.2), Massachusetts (15.6), Georgia (15.1), and Connecticut (15.0).
The largest increases in initial claims for the week ending June 27 were in Michigan (+18,668), Indiana (+15,496), Texas (+7,046), Virginia (+6,662), and Kentucky (+5,794), while the largest decreases were in Oklahoma (-40,208), Florida (-11,313), Maryland (-9,926), Georgia (-8,240), and California (-7,132).
SCOTUS Ruled 7-2 for Catholic Charity, Trump Administration in Religious Freedom Case
The Supreme Court of the United States (SCOTUS). (Photo: AdobeStock/bbourdages)
Washington, D.C. (PPD) — The U.S. Supreme Court (SCOTUS) ruled 7-2 in favor of the Little Sisters of the Poor on Wednesday, finding employers may be exempt from the contraception mandate in the Affordable Care Act (ACA), better known as ObamaCare, if they object due to religious or moral values. The ruling is a major victory for religious freedom.
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
AMENDMENT I, Constitution of the United States of America 1789
The Trump Administration allowed exemptions for religious-affiliated groups and some for-profit companies. The Catholic charity, which cares for the elderly, was involved with two related disputes against the state of Pennsylvania, and sued. Lower court rulings issued a nationwide injunction putting the exemptions on hold.
“For over 150 years, the Little Sisters have engaged in faithful service and sacrifice, motivated by a religious calling to surrender all for the sake of their brother,” Justice Clarence Thomas wrote for the majority opinion. “But for the past seven years, they — like many other religious objectors who have participated in the litigation and rule-makings leading up to today’s decision — have had to fight for the ability to continue in their noble work without violating their sincerely held religious beliefs.”
Justice Thomas was joined in his judgment by all the justices except for the Justice Sonia Sotomayor and Justice Ruth Bader Ginsburg, both of whom are extremely liberal. There were two concurring opinions, one written by Justice Samuel Alito and joined by Justice Neil Gorsuch, and another written by Justice Elena Kagan and joined by Justice Stephen Breyer.
“We hold today that the Departments had the statutory authority to craft that exemption, as well as the contemporaneously issued moral exemption,” Justice Thomas added for the majority. “We further hold that the rules promulgating these exemptions are free from procedural defects.”
Justice Ginsburg’s dissent focused on putting women’s health at risk. The ruling is expected to cause 70,000 to 126,000 women to lose contraceptive coverage from their employers, according to government estimates.
“Today, for the first time, the Court casts totally aside countervailing rights and interests in its zeal to secure religious rights to the nth degree,” she wrote. “Destructive of the Women’s Health Amendment, this Court leaves women workers to fend for themselves, to seek contraceptive coverage from sources other than their employer’s insurer, and, absent another available source of funding, to pay for contraceptive services out of their own pockets.”
However, proponents of religious freedom cite the relatively low cost compared to infringement on fundamental liberties protected by the First Amendment. According to Planned Parenthood, a contraception prescription costs $0 to $50 per month. The American Pregnancy Association notes that the initial physical exam with your physician may cost between $20 and $200.
Justice Kagan argued the Trump Administration did have the authority to issue the religious exemption to the contraceptive mandate. But she questioned whether the administration fulfilled “administrative law’s demand for reasoned decision-making.”
In an incredible twist, she used her opinion to give advice to opponents of the exemption. Justice Kagan wrote that Pennsylvania could further challenge the religious exemption as “arbitrary and capricious” in lower courts. The lower courts did not previously rule on that element because they had outright declared the administration didn’t have the authority.
Justice Alito noted this very point in his concurrence, in which he argues Justice Thomas’ ruling did not go far enough. He argued the Supreme Court should have ended the litigation and ruled exemption was required by the Religious Freedom Restoration Act (RFRA).
“We now send these cases back to the lower courts, where the Commonwealth of Pennsylvania and the State of New Jersey are all but certain to pursue their argument that the current rule is flawed on yet another ground, namely, that it is arbitrary and capricious and thus violates the APA,” Justice Alito wrote.
“If RFRA requires this exemption, the Departments did not act in an arbitrary and capricious manner in granting it. And in my judgment, RFRA compels an exemption for the Little Sisters and any other employer with a similar objection to what has been called the accommodation to the contraceptive mandate.”
The leftwing American Civil Liberties Union (ACLU) said the ruling gives the administration “a license to discriminate” in the name of religious liberty. Marjorie Dannenfelser, President of the pro-life Susan B. Anthony List, credited President Donald J. Trump for the victory.
“Today is a major victory for President Trump, who has courageously fought to protect the Little Sisters of the Poor from the Obama-Biden HHS abortifacient mandate,” she said. “We commend President Trump for standing strong for the Little Sisters of the Poor – his record stands in stark contrast to that of Joe Biden, who helped launch this assault as Obama’s Vice President nearly a decade ago.”
SBA: PPP Saved Roughly 84% of All Small Business Jobs, Despite Democrats Delaying Funds
With cautious optimism a small business owner wearing a face mask and disposable gloves posts safety rules as she reopens her store after the coronavirus (COVID-19)shutdown. (Photo: AdobeStock/JHDT Productions)
Washington, D.C. (PPD) — The Small Business Administration (SBA) reported on Monday the Paycheck Protection Program (PPP) saved more than 50 million jobs. With small businesses employing 59.9 million across the country, that represents upwards of 84% of all their employees.
According to the SBA data covering the period ending June 30, 5,461 lenders processed some 4,885,388 PPP loans totaling $521,483,817,756. PPP loans supported 51.1 million jobs and one quarter (13 million) were in Historically Underutilized Business Zones (HUB Zones).
“The PPP is providing much-needed relief to millions of American small businesses, supporting more than 51 million jobs and over 80 percent of all small business employees, who are the drivers of economic growth in our country,” said Secretary Steven T. Mnuchin. “We are particularly pleased that 27% of the program’s reach in low and moderate income communities which is in proportion to percentage of population in these areas.”
Across all 50 states, 72% to 96% of estimated small business jobs were covered by PPP loans. Low and moderate income received 27% of the funds, representative of the 28% share of the population.
“The average loan size is approximately $100,000, demonstrating that the program is serving the smallest of businesses,” Secretary Mnuchin added.
The total amount of funds remaining — approvals net of cancellations as well as loan amount increases, decreases, and reinstatements plus the $10 billion allocated for Community Development Financial Institutions (CDFI) — was $131,914,229,876.
“The PPP is an indisputable success for small businesses, especially to the communities in which these employers serve as the main job creators,” said SBA Administrator Jovita Carranza. “In three months, this Administration was able to act quickly to get funding into the hands of those who faced enormous obstacles as a result of the pandemic.”
As People’s Pundit Daily (PPD) previously reported, Democrats’ attempts to leverage the crisis to obtain concessions for unrelated progressive agenda items cost the U.S. economy valuable time.
First, the initial Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, was stalled by Democrats demanding a laundry list of last-minute, leftwing provisions. Then, Senate Democrats blocked the first attempt by Senate Republicans to replenish the PPP to the tune of $251 billion.
The result of the latter was a 12-day delay, and small business and their workers have been paying the price. The PPP exhausted its funding one day before the two-week mark after banks began taking applications.
“The jobs numbers released last week reinforce that PPP is working by keeping employees on payroll and sustaining millions of small businesses through this time,” Administrator Carranza added.
The U.S. Bureau of Labor Statistics (BLS) reported last week the U.S. economy added 4.8 million jobs in June, the largest gain ever recorded. The ADP National Employment Report found private sector employment increased by 2,369,000 jobs in June and the prior month was revised to show historic job gains.
Graphic concept of the NASDAQ Composite (^IXIC) in the green for gains. (Photo: AdobeStock)
New York, N.Y. (PPD) — U.S. equity markets surged on Monday, with the NASDAQ Composite (^IXIC) hitting an intraday before closing at a record high. The tech-heavy index closed +226.02, or 2.21% at 10,433.65.
The Dow Jones Industrial Average (^DJI) closed out the day +459.67 at 26,287.03, a gain of 1.78%. The S&P 500 (^SPX) closed +49.71, or 1.59% at 3,179.72.
The Russell 2000 (^RUT) closed +11.02, or 0.77% higher at 1,442.88.
The Institute for Supply Management (ISM) reported earlier that the Non-Manufacturing Index (NMI) rose to 57.1% in June, far stronger than economists expected. Last week, the ISM Manufacturing Index (PMI) also came in stronger than expected at 52.6% in June, up from 43.1% in May.
The readings both indicate the economy is growing again after disruption from the mitigation efforts to slow the spread of coronavirus (COVID-19).
In 2016, Hillary Clinton Set 104-Year Record for Faithless Electors
Digital composite of the U.S. Supreme Court (SCOTUS) building and the American flag. (Photo: AdobeStock)
Washington, D.C. (PPD) — The U.S. Supreme Court (SCOTUS) ruled Monday that states can punish faithless electors, members of the Electoral College who fail to fulfill a pledge to vote for a state’s popular vote winner in presidential elections. The vote was unanimous, 9-0.
“Today, we consider whether a State may also penalize an elector for breaking his pledge and voting for someone other than the presidential candidate who won his State’s popular vote,” Justice Elena Kagan wrote in the unanimous decision. “We hold that a State may do so.”
In 2016, big media headlines focused on and pressed for electors to go rogue and refuse to cast their vote for Donald J. Trump. In the end, 10 of the 538 presidential electors were faithless, attempting to vote for someone other than their pledged candidate. But the reality didn’t match the media narrative.
In a shocking development, Hillary Clinton set a 104-year record for the candidate with the most faithless electors. In Washington, four Democratic electors voted for someone other than Mrs. Clinton, including three for former Secretary of State Colin Powell and one for Faith Spotted Eagle.
That wasn’t the end of Mrs. Clinton’s troubles at the Electoral College. In Hawaii, another faithless elector added to the embarrassment. Not since 1912 — when 8 Republican electors defected and voted for Nicholas Murray Butler instead of Vice Presidential candidate James S. Sherman, who died before the election — has anyone lost more electors.
In all, 32 states and the District of Columbia (D.C.) have laws on the books discouraging faithless electors. But until 2016, no state had ever actually punished or removed an elector for being faithless. The Washington State Supreme Court upheld a $1,000 fine.
“We now affirm the Washington Supreme Court’s judgment that a State may enforce its pledge law against an elector,” Justice Kagan added.
In total, there had been 157 faithless electors since the founding of the Electoral College, of which 71 were the result of the candidates dying before the day electors cast their votes in 1872 and 1912. Only 3 electors abstained rather than vote for their party’s nominee and 83 electoral votes were changed based on the elector’s personal choice.
Now, the total has risen to 165 faithless electors. That represents less than 1% of total votes cast at the Electoral College.
“A State follows in the same tradition if, like Washington, it chooses to sanction an elector for breaching his promise. Then too, the State instructs its electors that they have no ground for reversing the vote of millions of its citizens,” the majority opinion concludes. “That direction accords with the Constitution—as well as with the trust of a Nation that here, We the People rule.”
“The judgment of the Supreme Court of Washington is Affirmed.”
NMI Posts the Largest Single Month Gain in Survey History
United States Postal Service (USPS) workers don face masks and gloves behind plexiglass at the USPS location on N. Main in Gainesville, Fla., during the coronavirus (COVID-19) pandemic. (Photo: People’s Pundit Daily/PPD)
Tempe, Arizona (PPD) — The Institute for Supply Management (ISM) Non-Manufacturing Index (NMI) rose to 57.1% in June, far stronger than economists expected. The reading indicates U.S. service sector activity returned to growth after two months of contraction.
Forecasts ranged from a low of 46.0 to a high of 52.7. The consensus forecast was 50.1. This is the largest single-month percentage-point gain since the NMI debut in 1997.
Last week, the Institute for Supply Management (ISM) Manufacturing Index (PMI) also came in stronger than expected at 52.6% in June, up from 43.1% in May. This reading further indicated the overall economy in expansion for the second straight month after one month of contraction that ended 131 consecutive months of growth.
Non-Manufacturing
Manufacturing
Index
Series Index Jun
Series Index May
Percent Point Change
Direction
Rate of Change
Trend** (Months)
Series Index Jun
Series Index May
Percent Point Change
NMI®/ PMI®
57.1
45.4
+11.7
Growing
From Contracting
1
52.6
43.1
+9.5
Business Activity/ Production
66.0
41.0
+25.0
Growing
From Contracting
1
57.3
33.2
+24.1
New Orders
61.6
41.9
+19.7
Growing
From Contracting
1
56.4
31.8
+24.6
Employment
43.1
31.8
+11.3
Contracting
Slower
4
42.1
32.1
+10.0
Supplier Deliveries
57.5
67.0
-9.5
Slowing
Slower
13
56.9
68.0
-11.1
Inventories
60.7
48.0
+12.7
Growing
From Contracting
1
50.5
50.4
+0.1
Prices
62.4
55.6
+6.8
Increasing
Faster
3
51.3
40.8
+10.5
Backlog of Orders
51.9
46.4
+5.5
Growing
From Contracting
1
45.3
38.2
+7.1
New Export Orders
58.9
41.5
+17.4
Growing
From Contracting
1
47.6
39.5
+8.1
Imports
52.9
43.7
+9.2
Growing
From Contracting
1
48.8
41.3
+7.5
Inventory Sentiment
55.9
55.1
+0.8
Too High
Faster
3
N/A
N/A
N/A
Customers’ Inventories
N/A
N/A
N/A
N/A
N/A
N/A
44.6
46.2
-1.6
Overall Economy
Growing
From Contracting
1
Non-Manufacturing Sector
Growing
From Contracting
1
Non-Manufacturing ISM Report On Business data is seasonally adjusted for the Business Activity, New Orders, Prices and Employment indexes. Manufacturing ISM Report On Business data is seasonally adjusted for New Orders, Production, Employment and Inventories indexes. **Number of months moving in current direction.
Jobless Claims Slightly Miss Forecast, Trend Down for 12th Straight Week
Washington, D.C. (PPD) — The U.S. Labor Department (DOL) reported initial jobless claims came in more than expected at 1,427,000 for the week ending June 20, a decrease of 55,000. The previous week was upwardly revised (+2,000) to 1,482,000.
Claims soared due to the mitigation efforts to slow the spread of the coronavirus (COVID-19), though have now declined for the thirteenth straight week. Forecasts ranged from a low of 1,000,000 to a high of 1,450,000. The consensus forecast was 1,400,000.
The 4-week moving average was 1,503,750, a decrease of 117,500 from the previous week’s upwardly revised average (+500) at 1,621,250.
Roughly 50 million Americans filed initial claims for unemployment benefits as a result of the efforts to slow the spread of coronavirus (COVID-19). However, millions now have returned to work given monthly employment situation statistics and lagging data.
Lagging Jobless Claims Data
U.S. initial jobless claims graph on a tablet screen. (Photo: AdobeStock)
The advance seasonally adjusted insured unemployment rate was 13.2% for the week ending June 20, unchanged given the previous week’s rate was revised down by 0.2 from 13.4 to 13.2%.
The insured unemployment rate hit the first high of the current crisis at 8.2% for the week ending April 4. The all-time high prior to that was 7.0%, recorded in May of 1975. On April 11, it rose to 11.0% and 12.4% on April 25.
Under the Trump Administration, this rate had fallen to an all-time low 1.1% and remained at 1.2% just weeks ago, as recently as March 14. But that was before coronavirus (COVID-19) mitigation efforts.
The advance number for seasonally adjusted insured unemployment during the week ending June 13 was 19,290,000, an increase of 59,000 from the previous week. The previous week’s level was revised down by 291,000 from 19,522,000 to 19,231,000.
The 4-week moving average was 19,854,000, down 494,500 from the previous week. The previous week’s average was downwardly revised by 72,750 from 20,421,250 to 20,348,500.
June Jobs Report Smashes Expectations, See Positive Revisions for May
Washington, D.C. (PPD) — The U.S. Bureau of Labor Statistics (BLS) reported the U.S. economy added 4.8 million jobs in June, the largest gain ever recorded and the unemployment rate fell to 11.1%. The historic gain in jobs and decrease in the rate come after a historic gain in May and historic declines due to the mitigation efforts to slow the spread of the coronavirus (COVID-19) in April.
The forecasts for total nonfarm payrolls ranged from a low of -11,000,000 to a high of -3,500,000. The consensus was -7,725,000. The forecast for the unemployment rate ranged from a low of 10.1% to a high of 14.8%. The consensus forecast was 12.4%.
Series with themes reflecting a certain billionaire politician who won the 2016 presidential election touting a very strong labor market. (Photo: AdobeStock)
The labor force participation rate increased by 0.7 percentage point in June to 61.5%, following a 0.6 percentage point gain in May. The forecast for the labor force participation rate ranged from a low of 60.7% to a high of 61.2%. The consensus forecast was 61.1%. The less cited but equally important employment-population ratio gained 6.5 percentage points to 54.6%.
Construction employment increased 158,000 in June after recovering nearly half of its losses in April (-995,000) the month prior, rising 464,000 jobs in May. Much of the gain occurred in specialty trade contractors (+135,000), with gains roughly evenly split between the residential and nonresidential. Job gains also occurred in construction of buildings (+32,000), largely in residential building.
Manufacturing employment rose by 356,000, driven largely by the durable goods component, with motor vehicles and parts (+196,000). In April, manufacturing employment fell by 1.3 million, with about two-thirds of the loss occurring in the durable goods component.
The forecast for manufacturing employment ranged from a low of -440,000 to a high of 600,000. The consensus forecast was only 180,000.
The decline in total nonfarm payroll employment for April was revised down by 100,000, from -20.7 million to -20.8 million. The increase for May was revised up by 190,000, from +2.5 million to +2.7 million. With these revisions, employment in April and May combined was 90,000 higher than previously reported.
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