Jobless Claims Fall to Pandemic Low, Fed’s Bullard Urges Bond Tapering (Powell Says Too Soon)

(Bloomberg) — Applications for U.S. state unemployment insurance fell last week to a fresh pandemic low, indicating that dismissals are easing as business conditions improve and firms look to increase headcounts.

Initial claims in regular state programs decreased by 26,000 to 360,000 in the week ended July 10, Labor Department data showed Thursday. The median estimate in a Bloomberg survey of economists called for 350,000 initial applications.

Federal Reserve Bank of St. Louis President James Bullard said the central bank has met its goal of achieving “substantial further progress” on both inflation and employment, urging policy makers to move forward in reducing stimulus.

On the other hand, Federal Reserve Chair Jerome Powell said it was still too soon to scale back the central bank’s aggressive support for the U.S. economy, while acknowledging that inflation has risen faster than expected.

Let’s hope Bullard convinces Powell to begin tapering, given the surge in inflation and today’s import and export price figures.

Today’s capacity utilization numbers rose, but show a disturbing trend that The Fed can’t fix. Capacity utilization is lower (75.38%) than the near 85% back in the 1990s. Capacity utilization has fallen with labor force participation and M2 Money Velocity in a general downward trend since the 1990s.

And in the world of commodities, only gold, silver and iron (Fool’s Gold?) are up today. Everything else is down.

Milton with shades.

May US Existing Home Sales Fall -0.9% MoM, Available Inventory Increases Slightly, Median Price Up 2.8% MoM And 23.56% YoY

Fed Chair Powell will speak to a Congressional Oversight Panel today at 2pm. He released his printed statement, and mentions that inflation is usually high.

Inflation has increased notably in recent months. This reflects, in part, the very low readings from early in the pandemic falling out of the calculation; the pass-through of past increases in oil prices to consumer energy prices; the rebound in spending as the economy continues to reopen; and the exacerbating factor of supply bottlenecks, which have limited how quickly production in some sectors can respond in the near term. As these transitory supply effects abate, inflation is expected to drop back toward our longer-run goal.

Fed speak 101. Aka, “Things got so bad, that of course prices are rising from the pit of despair.” No mention of M2 growing like a bat out of hell or Fed Mission Creep.

But how about existing home sales for May 2021? Median price for existing home sales are up 23.6% year-over-year with surging M2 money supply.

On a month-to-month basis (MoM), existing home sales median price rose 2.8% on slightly higher available inventory.

I want to think that the Congressional Oversight Panel will ask insightful questions, but that is wishful thinking. It is all Kabuki Theater.

Here is the Congressional Oversight Panel questioning Fed Chair Powell.