Economic update for the week ending September 5, 2020

The U.S. economy added 1.37 million jobs in August – The Department of Labor Statistics reported that employers added 1.37 million jobs in August. While that number slightly exceeded expectations, approximately 250,000 were temporary census workers hired by the federal government, so the report was pretty much what analysts expected. The unemployment rate dropped to 8.4% in August from 10.2% in July. August’s unemployment rate was the lowest since March 2020. The unemployment rate in February was 3.6% but I surged in March and April when it peaked at 14.7%. This was due to the government-ordered shutdown of the economy because of the Coronavirus pandemic. While 24.2 million people are still not working, who’s employers have either shut down or reduced staff, the economy is still on a positive track.

Stock markets lost ground at the end of the week – Stocks had a losing week after five weeks of gains. Tech stocks, which have soared this year, were hit the hardest as investors took profits. The lack of a deal on another stimulus package weighed heavily on investors. It was thought to be a done deal a few weeks ago, but now some fear that with jobs showing signs of a rebound additional government stimulus may not be as hefty of a package as once thought, especially since the deficit spending this year is expected to exceed the entire GDP for the first time since World War 2. The Dow Jones Industrial Average closed the week at 28,133.31, down 1.8% from 28,653.87 last week. It’s down 1.4% year-to-date. The S&P 500 closed the week at 3,426.96, down 2.3% from 3,508.01 last week. It’s up 6.1% year-to-date. The NASDAQ closed the week at 11,313.14, down 3.3% from 11,695.63 last week. It’s up 26.1% year-to-date.

U.S. Treasury bond yields – The 10-year treasury bond closed the week yielding 0.72%, down slightly from 0.74% last week. The 30-year treasury bond yield ended the week at 1.46%, down from 1.52% last week.

Mortgage rates – The September 3, 2020, Freddie Mac Primary Mortgage Survey reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate average was 2.93%, almost unchanged from 2.91% last week. The 15-year fixed was 2.42%, down from 2.46% last week. The 5-year ARM was 2.93%, almost unchanged from 2.91% last week.