Based on the data releases on Wednesday morning, the US economy is in pretty solid shape.
Durable goods orders surged passed expectations, the University of Michigan’s consumer confidence leaped, Markit’s reading of the manufacturing sector beat projections, and initial jobless claims hit a 90th straight week under 300,000.
A number of organisations releasing these data points cited a big reason for the improved outlook: the election is over.
Chris Williamson, the chief business economist from Markit, noted that manufacturing purchasing managers cited the election ending as a reason new orders leapt to their highest level in over a year.
“Many factories reported that demand from customers had picked up as uncertainty about the election result cleared,” said Williamson.
Now it would be a natural inclination to think that this means President-elect Donald Trump has “Made America Great Again,” but the fact that Trump was the victor on November 8 probably has less to do with the data than the simple fact that a victor was named at all.
One good indication that it’s not about Trump specifically comes from the UMich consumer confidence release.
“The upsurge in favourable economic prospects is not surprising given Trump’s populist policy views, and it was perhaps exaggerated by what most considered a surprising victory as well as by a widespread sense of relief that the election had finally ended,” said UMich economist Richard Curtin in the report.
Additionally, jobless claims actually ticked up from the previous week, above last week’s historic low for the labour market indicator. Thus, the bounce this week according to Ward McCarthy at Jefferies, shows that the record was just an aberration.
“Last week’s claims came in the lowest level of claims since the week ended July 14th, 1973, but the rebound this week suggests that this was a one-off dip,” said a note from the chief economist. “Last week’s reporting date was near Veteran’s Day and floating holidays can sometimes create seasonal adjustment difficulties.”
Put another way, it’s not that Trump won, it’s that the darn thing was finally over.
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