Weekly Economic Report
Last week, we noted that the economy remained too weak and the virus too strong. This week, we saw far better news on both fronts. Retail sales surprised on the high side by almost as much as the employment report had two weeks ago – bringing aggregate sales roughly two-thirds of the way back to the level seen pre-COVID. The wave of stimulus checks and excess unemployment payments generated a much stronger spending response among lower income households than expected by the consensus. That optimistic news was reinforced by a shockingly strong Philadelphia Fed – with expectations at near record levels. Unfortunately, slowing progress on initial and continuing claims indicate that the economy – while improving – still has a long and painfully inequitable grind ahead. Meanwhile, a major report out of the UK indicates that an existing and inexpensive steroid, dexamethasone, improves survival rates for those on ventilators by one-third and for those on oxygen by one-fifth. The authors estimate that widespread use would have reduced deaths by 12% in the UK. This is particularly good news for Latin America and other low-income regions with limited health care options, where the disease is spreading most aggressively now.