This Week’s Economic Update, April 4, 2022

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Our typical flu season starts in December and carries through until early March.  Travel is a key factor in the spread of the flu.  Since many families have deferred vacations over the past two years, it has left little to talk about.  Recent travels northward related to the supposed Spring weather is causing a new flu season that is shaping up to be the worst since 2015 and is proving extremely costly. 

Last week the Bird Flu showed up in numerous places across the Northern United States.  Reports of the outbreak are coming in from at least 20 states.  The 2015 strain hit 15 states causing an estimated depopulation of flocks up to 50 million.  As of the end of March, 15 million birds have been depopulated.  It is not only the US that is getting hit, in Europe the bird flu is raging with even more force.  The impact on poultry prices is already fowling things up.  As for dying Easter Eggs, it is no yolk to expect a dozen eggs to cost $3.00 an up, if they can be found.  Wing prices should be taking flight right as barbeque season starts.

The Dallas Fed manufacturing report was soft compared to the February number of 14.  While still robust at 8.7, the softening occurred mostly from new orders which were the weakest in the last year.  Over the past month it appears that manufacturing is regionally strong in some areas and weakening in others, like the East Coast centered around New York.  The Manufacturing ISM report for March was again strong at 57.1 but off the high of February at 58.6.  This is still a great number showing very strong manufacturing expansion.  Across the report were numbers that showed growth was good but the pace is slowing slightly.  New orders were soft, back log orders were soft, new export orders were soft as well as import orders.  Nothing to be concerned about at this time.  Something to keep an eye on.

Within the ISM report it was not a surprise that prices were up on commodities.  The surprise might be that steel prices have decreased in the past month.  The price increases could be one reason for the plateauing of growth, but then again in most of the industry comments, there is optimism. The only common negative thread in the comments is select supply chain items, particularly in the electronics area.  Sadly, this is setting the expectations for higher prices throughout 2022.

For the past week we had a net increase in total oil and gas rigs of 3, moving from 670 to 673.  This is still well below the kind of growth we need to offset higher prices.  While the President’s declaration on Friday moved the markets, it is not expected to drive prices down significantly.  The only way we are going to see a drop in energy prices is if there is more production.  The investors at this point are still sitting on the sidelines leery of investing at this point.

After a strong February number on non-farm payrolls, the March addition was only 426,000.  That was the lowest increase in six months.  However, on the heels of the February number of 739,000 the March number can not be much of a surprise.  The manufacturing portion of that increase was 38,000.  The issue appears to be in finding qualified, desiring to work, candidates.  With the U6 Unemployment rate at 6.9% it appears that there are plenty of candidates available.  The issue is true desire and training for the jobs that are open.  The U3 Unemployment level at 3.9% is essentially full employment for those who want to work.  Convincing those on the sidelines to re-enter as well as invest in the training to qualify for the open positions is where government programs would likely perform the best.

Have a great week.



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