We digested a lot of economic data last week, both at home and abroad. While some readings were stronger than others, the growth trajectory continues to point upward.

Widespread distribution of the COVID-19 vaccine has played its part in the economic recovery throughout 2021, allowing for more areas of the globe to gradually reopen. In the U.S., the Centers for Disease Control says that about 60 percent of the eligible population (12 years old and higher) have received at least one dose.

The breadth and depth of the post-pandemic economic expansion can be observed in multiple areas:

For one, the Transportation Security Administration (TSA) said that an average of 1.72 million travelers were screened daily through its checkpoints for the week ended May 28. There’s still room to recover to the 2.5 million daily travelers processed in May 2019, but forward bookings of airline tickets in July are running just 5 percent below comparable 2019 levels.

Elsewhere, according to OpenTable, the number of seated diners in the U.S. is also trending higher. During the week ended May 29, the figure was just 7 percent lower than the same period in 2019.

In addition, the recovery is translating to corporate earnings growth. Aggregate 2021 profit expectations for the S&P 500 started the year at $162 per share. During the recent earnings season, they have increased more than 15 percent to a record of $187 earnings per share. That’s 21 percent higher than the result in the pre-pandemic environment of 2019.

With an eye toward the second half of the year, we believe that the recovery can continue to press forward and expand into Europe as we move toward a sustainable plateau that is supported by both coordinated fiscal and monetary policy.


Capital Goods Orders Jump Higher: The Census Bureau reported on Thursday that new core capital goods orders grew a seasonally adjusted 2.3 percent in April, excluding aircraft and military equipment. This marked the highest growth in eight months, as businesses are investing to replenish historically low inventory levels.

Core PCE Index Presses Higher: The Bureau of Economic Analysis said on Friday that the core personal consumption expenditures (PCE) price index increased 3.1 percent year-over-year in April, excluding food and energy. That marked the largest jump since 1992, confirming data we saw recently in the consumer price index (CPI) report. Rising inflationary pressures are a key concern as we move into the second half of the year, although the Federal Reserve maintains the price increases we’ve seen in recent months will likely prove temporary.

Consumer Confidence Remains High: On Tuesday, the Conference Board said that U.S. consumer confidence declined slightly in May from the previous month. An increase in the current conditions index offset a drop in future expectations, but the overall tally of 117.2 remains near the highest level seen since the pandemic.

Digging a little deeper into the data shows the Labor Differential measure increased to a net 34.6 percent last month. That many more people surveyed said that jobs were “plentiful” as opposed to “hard to get,” relative to negative 1.8 percent in January.

Jobless Claims Continue to Improve: Speaking of jobs, the Department of Labor said Thursday that weekly jobless claims fell for a fourth straight week, to a seasonally adjusted 406,000. As more Americans are expected to return to work and increase travel in the coming months, we could likely continue to make progress toward the pre-pandemic level of 256,000.

Home Sales Decline on Higher Prices, Lower Supply: The Census Bureau said Tuesday that U.S. new home sales fell 5.9 percent in April to an annualized rate of 863,000. Despite the lower figure, homebuilders appear to have plenty of runway ahead of them. The backlog of houses sold and awaiting construction grew to 325,000, which was the highest in 15 years. One reason for the decline in sales could be higher prices. The median price of a new home jumped 20.1 percent from a year ago to $372,400, marking the largest increase since 1988.

On Thursday, the National Association of Realtors (NAR) also said its pending home sales index dropped to 106.2 in April. This was the lowest reading since May 2020, as the NAR cited a record low inventory of houses available for sale in the first quarter.

Eurozone Recovery Continues to Progress: On Friday, the European Commission (EC) reported that its Business and Consumer Survey increased to 114.5 in May. This was the highest reading in three years, as both consumers and industries such as construction showed increased confidence. Each of the six largest economies in Europe posted gains, led by Italy. While the eurozone has lagged the U.S. in its recovery by a few months, we would expect to see continued progress in the summer as travel restrictions are loosened.


ISM Data Offer Broad Measure: The Institute for Supply Management (ISM) will announce its May manufacturing index today, followed by a gauge of the services sector on Thursday. The financial markets will look to these readings for confirmation of the robust preliminary U.S. purchasing managers’ index (PMI) data from IHS Markit.

Employment Data in Focus: On Friday, the Bureau of Labor Statistics will release the May employment report. Expectations are for the addition of 650,000 non-farm payrolls last month, following surprise growth of just 266,000 in April.

Eye on Inflation in Europe: The EC will announce its April CPI today, followed by the producer price index (PPI) on Wednesday. As the global recovery continues to expand, so does the watch of rising inflationary pressures.

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