It is interesting to look back over our history to see just how unique the past 30 years or so have been in presidential history. Our recent experience with two term presidents is completely out of the norm. We have had three two term Presidents in a row, Clinton, Bush and Obama. If Trump wins this election that would be four in a row. That is an unheard of stability within our history. From 1829 to 1869, 40 years, only one President, Zachery Taylor served two full terms. Starting in 1869 with the election of Ulysses Grant, you had to wait until 1921, 52 years, to find another President, Woodrow Wilson, that served two consecutive terms. From 1913 to 1981, a period of 68 years between when Wilson took office and Jimmy Carter left office, we had a total of three Presidents who served out two full terms, Wilson, Roosevelt and Eisenhower. Since 1981 a period of 40 years, we have had 5 Presidents serve two terms. Interesting trivia likely worthy of Cliff Claven from Cheers. Regardless, if you have not already voted, please take the time to do so.
The durable goods orders for September that were released last week confirmed much of my earlier updates over the past month. The core durable goods number came in at 1.9%. Initially that might sound a bit low. When you take out defense spending the number roars to 3.4%. That is a very strong showing in the time of Covid. The consumer is holding up the durable goods number in fine fashion. Spending on vehicles, furniture, household goods and appliances is going strong. As expected business continues to hold back on new equipment investments. The overall capacity of industry is still low enough not to require new investment, yet.
The October manufacturing numbers which will come out today, should be strong. The Dallas Fed manufacturing index presented a strong 19.8 number nicely exceeding last month’s 13.6. Likewise the Richmond Fed Manufacturing number came in at 29, 8 above the 21 figure from September. The Manufacturing ISM number will be out on November 2. Based on the numbers I am seeing it should be mid to upper 50’s reflecting a strong manufacturing presence.
The third quarter GDP number of 33% is good, it does show a nice recovery. To be fair, 33% of a low number is not always a much higher number. The second quarter was horrid as far as GDP goes, virtually everything was shut down. In the third quarter we opened back up and the economy improved nicely. I would expect the fourth quarter to be in the 10% to 15% growth since the denominator is higher. I do not foresee another shut down, there is enough popular opposition to a further curtailment that I would expect a major kickback by most of the population. Without some sort of strong stimulus program the economics of another shut down would be devastating to people who are already on or over the edge.
The new unemployment numbers as well as continuing claims are moving in the right direction. More firms are hiring and those who were furloughed are finding good jobs. Again, the workers who were out of work and now have a job will be less patient with a second shut down and lay off. Be aware, the unemployment numbers will likely increase shortly. Boeing and others that have been hit hard will be announcing layoffs in the next month. Many banks and other industries have been holding out until late this year but will be making cuts coming up. They will also be vacating office space which is no longer needed, stressing the real estate market.
Have a great week.