Consumer Staples Are Cheap

Surprisingly, we are getting improved jobless claims reports. This is the 2nd week they fell. This supports the thesis we have discussed a bunch of times which is that more people don’t stay unemployed just because of higher benefits. People want to work. Virtually no one wants to stay home for an extra $300 per week until March. Specifically, in the week ending January 23rd seasonally adjusted claims fell 67,000 to 847,000.

The bad news is last week’s report was revised up 14,000 to 914,000. It still showed a decline though. Non-seasonally adjusted claims fell 101,000 to 874,000 this past week. PUAs fell 20,000 to 427,000 which is why total unadjusted new benefits fell 9%. That’s the first decline this year. As we mentioned would happen in our article last week, the total number of people on all benefits rose in the week of January 9th. It was up from 15.99 million to 18.28 million. In the week ending January 16th, continued claims fell from 4.974 million to 4.771 million. The recovery would be in amazing shape without the pandemic benefits.

Stimulus Increases Spending

It makes sense more people are spending this stimulus than the one last April because people were in survival mode then. They hoarded resources because the pandemic was very uncertain. Obviously, it ended up being quite terrible, but not terrible enough to shut down the American consumer. We showed a poll in a past article that said most people would spend their $1,400 check on bills. That’s kind of a vague answer. You can spend a lot of money with your credit card on discretionary items; your credit card statement counts as a “bill”, but you still bought discretionary items.

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