Below is a brief excerpt transcribed from Friday's edition of The Macro Show hosted by Senior Macro Analyst Darius Dale.

Dale: 3 Phases Of The COVID-19 Economic Crisis - 8 14 2020 12 44 10 PM

Let’s dive into Phase 3.

Yesterday we got the Jobless Claims data and it was pretty good. There isn’t really any other way to contextualize it.

You had initial claims taken down to the lowest print we’ve seen since March 13th.

Dale: 3 Phases Of The COVID-19 Economic Crisis - 8 14 2020 12 45 20 PM

When you look at Total Unemployment Insurance Claims you can also see they ticked down 3.06 million to 28.3 million in total.

That's still just shy 1/5th of the workforce, but it is the lowest of the print we’ve seen since May 1st.

Dale: 3 Phases Of The COVID-19 Economic Crisis - 8 14 2020 12 45 42 PM

In terms of Phase 3, we still have a belief that the labor market will inflect lower in the later parts of August and into September.

As you can see in this chart (above), that’s data through the end of July so it is on a fairly severe lag, but it is as near time an indicator as we can get outside of the data we track in our hyper high frequency data sequencer.

Take a look.

Dale: 3 Phases Of The COVID-19 Economic Crisis - 8 14 2020 1 00 06 PM

We continue to see measures of sentiment move in the wrong direction, in so much as we continue to see measures of mobility and commerce move in the right direction.

You can see public transit demand drawdowns, TSA numbers, open table data, real traffic, housing, and purchasing apps all moving positively.

That is all from the tail end of Phase 2 which falls in line with the Jobless claims data we got.

Recall:

  • Phase 1 was the shutdown.
  • Phase 2 is the reopening and the associated economic acceleration.
  • Phase 3 is what happens to the economy once we are done reopening.

We think that the rubber meets the road here in August and we would expect some of these measures of mobility and commerce to inflect lower as the sentiment measures have.

There are a lot of cross currents in the labor market when you look at the reality of softer indicators like PMI’s, Consumer Confidence, and the ADP print.

August to September remains the transition period.