Global equity markets struggled for direction yesterday (25 August 2020) after mixed US economic data suggested that there is the potential for a two-track recovery, between higher-paid Americans with secure jobs versus those that the coronavirus has disproportionately hit (i.e. the low paid and those that have, or had, jobs with a high risk of layoff, such as restaurants, hairdressers and retail).
The US Conference Board’s consumer confidence unexpectedly dropped to 84.8 (its lowest reading since May 2014), from 91.7 in July (which was itself downgraded from 92.6).
However, US new home sales data smashed expectations climbing 13.9% to 901,000 in July on an annualised basis from an upwardly revised 791,000 reading in June – the major economists had forecast 790,000 sales in July.
This data hopefully serves as a reminder to the politicians in Washington, from both sides of the aisle, that they need to stop playing brinkmanship at the expense of hard-hit American workers and agree a new US fiscal stimulus package – especially as failing to provide fiscal support in the face of the recent resurgence in coronavirus cases and the current elevated unemployment levels, could have a significant impact on US swing states (i.e. those that could be won by either the Republicans or Democrats) come the Presidential elections on Tuesday 3 November 2020.
It is another light day for economic data – of most interest is this afternoon’s US durable goods reading.