Sentiment Remains on Shaky Ground: February 8 – 12

Hiring and layoffs declined in December. Here are the five things we learned from U.S. economic data released during the week ending February 12.


Hiring slowed during the final days of 2020. The Bureau of Labor Statistics estimates employers hired a seasonally adjusted 5.539 million workers in December, down 396,000 from November and 6.5 percent from a year earlier. The slowdown in hiring occurred even as the count of job openings edged up by 74,000 to 6.646 million (which also was 1.4 percent ahead of its year-ago level). Fewer people left their jobs in December, as the 5.460 million separations were down 63,000 from the prior month and 5.2 percent from a year earlier. The latter included an 86,000 increase in the number of people quitting their jobs (to 3.180 million) and a 243,000 drop in the number of laid off people (to 1.812 million).

Net of energy, consumer prices held steady in January. The Bureau of Labor Statistics reports the Consumer Price Index (CPI) increased a seasonally adjusted 0.3 percent during the month, its biggest gain since last August. Energy CPI surged 3.5 percent, pulled up by sharp rises for gasoline (+7.4 percent) and fuel oil (+5.4 percent). Food CPI advanced 0.1 percent, with food-at-home prices slipping 0.1 percent. Net of energy and food, core CPI did not budge for a second consecutive month. Rising were prices for apparel (+2.2 percent), medical care services (+0.5 percent), and shelter (+0.1 percent). Prices declined for used cars/trucks (-0.9 percent), new vehicles (-0.5 percent), and transportation services (-0.3 percent). CPI and core CPI each have risen 1.4 percent over the past year.

Consumer sentiment continues to wobble. The University of Michigan’s Index of Consumer Sentiment lost 2.8 points in early February to a seasonally adjusted 76.2 (1966Q1=100). One year ago, the index was at 101.0. The current conditions suffered only a small decline, losing a half-point to 86.2, while the expectation index fell by 4.2 points to 69.8. Each is well below their year-ago marks of 114.8 and 92.1, respectively. The press release noted the drop in sentiment came from households with incomes under $75,000. The University of Michigan will update its February sentiment data at the end of the month.

Small business owner sentiment deteriorated again in January. The Small Business Index National Federation of Independent Business declined for the third straight month, shedding 9/10ths of a point to 95.0. The index has down 9.3 points from a year earlier as it fell to its lowest reading since last May. Four of the measure’s ten components declined from December, including a sharp drop in expected economic conditions. Only two components—expected credit conditions and current job openings—improved in January. The press release noted that “pandemic continues to dictate how small business operate.”

The mortgage delinquency rate dropped during the final months of 2020. The Mortgage Bankers Association reports that the delinquency rate for one-to-four residential property mortgages plummeted by 92-basis points during the fourth quarter of 2020 to a seasonally adjusted 6.73 percent. Even though its largest-ever quarterly decline in the 42-year history of the data series, the delinquency rate remained 296-basis points above year-ago levels. Delinquencies fell across all major mortgage categories: conventional (-84 basis points to 5.09 percent, VA (- 87 basis points to 7.29 percent), and FHA (- 94 basis points to 14.65 percent). The press release noted that “[m]ortgage forbearance, foreclosure moratoriums, enhanced unemployment benefits, and stimulus payments have helped distressed homeowners remain in their homes.”

Other U.S. economic data released over the past week:

  • Jobless Claims (Week ending February 6, First-Time Claims, seasonally adjusted): 793,000, -19,000 vs. the previous week, +589,000 vs. the same week a year earlier). 4-week moving average: 823,000 (+293.3% vs. the same week a year earlier).
  • Monthly Treasury Statement (January 2021—First 4 Months of FY2021, Federal Government Budget Deficit/Surplus): -$735.7 billion (vs. -$389.2 billion).
  • Wholesale Trade (December 2020, Wholesaler Inventories, seasonally adjusted): $651.5 billion (+0.3% vs. November 2020, +0.3% vs. December 2019).

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

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