Fiscal Stimulus Might Be Here

COVID-19 Hurting Mobility

Redbook same store sales growth in the week of December 12th rose from 2.1% to 2.5%. That’s still relatively weak. We’ve seen varying reports from this holiday season, but it hasn’t stopped retail stocks from moving higher as the XRT retail index is up 11% in the past month. Investors are looking past any potential weakness in December and looking forward to the 3.7% spending growth consumers are projecting.  

Mobility is basically at a standstill which some argue is a good thing because it means COVID-19 will stop spreading so quickly. The northeastern blizzard this week surely won’t help mobility and consumer spending (other than spending at supermarkets). As you can see from the chart above, the 7-day moving average of mobility is back where it was in June. It’s down over 60% from where it was before the pandemic.

The good news is the pandemic has peaked in the Midwest and we are starting to see vaccine counters which will only spike higher in January. The bad news is there are now 112,816 people in the hospital. The 7 day average of deaths is at 2,472 which is a record. December is easily the deadliest month of the pandemic. The best-case scenario would be a decline in cases in the next few weeks and more vaccines going out. It’s probable that deaths will fall in January.

Fed Meeting Wednesday

We are inching closer to a fiscal stimulus. It has been painstaking. McConnell stated, “We’re not leaving here without a COVID package.” Obviously, he has said that before, but the difference now is the deadline for a deal is in 3 days. It’s good to hear optimism when the final details of the deal are being settled. We could be on the precipice of a deal that includes unemployment benefits of $300 per week for 16 weeks. 

There won’t be another round of $1,200 checks. Basically, the government is doing the minimum to have the economy survive the pandemic. It’s an odd situation because I think $1,200 checks are very popular with citizens. The good news is in a few months, the economy won’t need fiscal policy to help it. 

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