September Numbers Show The Economy Picking Up- But For How Long?
Dr. Hank Fishkind, of Fishkind Litigation Services, tells 90.7’s Matthew Peddie that retail sales for September were strong, led by store openings and pent up demand from consumers.
But he says there are worrying signs that a resurgence in the pandemic could slow the recovery.
Matthew Peddie: Hank Fishkind, last week’s economic news was refreshingly positive for the country and for our economy. Just what are some of the highlights?
Hank Fishkind: Well, let’s start with the national reports, Matthew. September sales were up strongly and new claims for unemployment compensation high but much less than expected. Here in Florida, there were 47,300 new jobs generated in September. And although the unemployment rate ticked up to 7.6%, all of that was due to rise in Miami Dade County, and every other metro area, including Orlando reported lower unemployment.
MP: Well, that’s good news, a little bit surprising perhaps. What about the retail sales report, though? I mean, there’s nationally high levels of unemployment; another federal stimulus package hasn’t come through yet. Why are retail sales doing so well?
HF: It is a bit strange, Matthew, retail sales grew 1.9% September, and they are 2.4% above their year ago levels. All of that came from big jumps in sales of cars, trucks, clothing, and more generally a 10% increase in department store sales. Now, as noted, and this is really surprising, given the high levels of unemployment, but it appears that a combination of more store reopenings and pent up demand produced this big September surge.
MP: Okay, so people clearly still do have a bit of money in their wallets to spend, we’re heading into the, you know, the holiday shopping season too, as well. So what does this mean for the recovery? Does it mean that we’re perhaps looking at something a little more vigorous than we might have thought?
HF: I wish, Matthew but I don’t think that’s the case. You know, it’s hard to have sustained growth in retail sales if we don’t have sustained gains in income and jobs. And we don’t have that.
MP: So let’s talk about Florida’s jobs report for September that showed a gain of some 47,800 jobs. Which sectors and which regions in Florida are producing the growth?
HF: Yeah, it’s very revealing. Local government employment jumped 12,000 as teachers returned to their classrooms. There was 8000 additional health care workers and 9000 more retailing jobs as more stores reopened. Regionally, the biggest gains were concentrated in South Florida, a jump of 10,000 jobs in West Palm, 7000 in Ft. Lauderdale, 6000 in Miami, and there were gains of more than 3000 in Jacksonville and Tampa.
MP: Well, in Central Florida, the story has been all about the theme packs, and you know, the layoffs there. But what are we hearing, what’s in the jobs report for Central Florida, at least?
HF: In Palm Bay, and in Lakeland-Winterhaven, they had 1700 new jobs. And that was followed by 1500 more jobs in Deltona and then only 1300 in Orlando. The unemployment rates declined modestly in all Central Florida areas. But it’s striking that Orlando ranked last locally, reflecting that ongoing weakness in the tourism sector, Matt.
MP: Okay, so what indicators are you looking at most closely over the next few weeks?
HF: The two main focuses for me are the data for new claims for unemployment and those COVID cases.
MP: And what are those claims telling you?
HF: Well, the claims are telling me there’s a significant rise in Florida for the reporting week, October 10, that correlates with the surge of layoff announcements over the last few weeks. You know, if that trend continues, it’s going to point to slower job growth ahead.
MP: Let’s talk a little bit about the COVID-19 cases, then. What are you reading into those reports?
HF: Well, nothing good, you know, cases are increasing across the country. Here in Florida. The latest seven day average of new cases is about 3000, which is up over a third from last month’s 2000. And the rate of positivity is 5%. You know, and with increasing reopening stores and bars and schools, those new cases are likely to continue to rise.
MP: And if you look more closely at schools reopening, what is the impact of those reopenings?
HF: Well, there’s certainly compelling arguments to reopen them. And you know, I was really quite worried about it. But it turned out so far, a little better here in Florida, but not across the country. In fact, where states have provided less aggressive approaches, you know, they’ve done better. Those with aggressive approaches to reopening have higher case loads. And the correlation between aggressive reopening and case loads is 0.7, meaning a very strong statistical relationship. And so those states that have moved aggressively to allow students to return certainly are having higher levels of exposure in case loads, and it’s really risking hospital capacity issues. You know, the result would likely be another series of economic setbacks if we don’t do something about it. And that would be driven not just by official lockdowns, but instead by consumers pulling back and regrettably, Matthew, Florida and the nation are on the cusp of just such an unfortunate development.
MP: Hank Fishkind is 90.7’s economic commentator. Thank you so much, Dr. Fishkind.
HF: Thank you, Matt.