QI Takeaway — Fiscal dysfunction clearly disagrees with the markets, especially as the clock ticks on the U.S. government’s checking account hitting overdraft in 17 days. Markets have yet to fully price in the risk of a Fitch or Moody’s downgrade suggesting upside in volatility.
- Though the child tax credit has boosted spending through a $550 monthly boost, BofA credit card data suggests the unemployed cohort is pulling back; though a backlog is likely keeping PUA claims elevated, the cohort has nearly vanished from their May peak of 1.35 million
- Weekly initial state jobless claims have now risen for three straight weeks, a streak not seen since April 2020; a model from the St. Louis Fed using data from Homebase suggests that hiring could’ve been negative in September, with a seasonally adjusted decline of 810,000
- Per ISM, the Chicago PMI saw Backlogs decline in September while its Employment Index rose; the Backlog-Employment spread is now down from August’s record high of 30.8 to a five-month low of 13.1, an encouraging sign that the labor shortage is starting to see relief