January 2021 Economic Update

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January 12, 2021


Public Trust Trading Desk

As COVID-19 vaccines slowly work their way across the world, we begin the new year with hopes that this year will be much better than the last. But despite this renewed optimism, many familiar headwinds persist. New virus cases are spiking throughout the country, threatening to overrun our healthcare system and offsetting the positive effect of inoculations. Unemployment remains elevated with a disproportional impact across races, education levels, and income classes. The $900 billion COVID relief package passed by Congress in December will assist the unemployed and small businesses, alleviating some of the pain as the pandemic drags on.

Unfortunately, nearly four million Americans have been out of work for at least 27 weeks, the threshold for long-term unemployment. The reversal of public health orders can be directly attributed to December’s 140k drop in non-farm payrolls, where restaurants, bars, and hotels felt the brunt of fresh pandemic restrictions. So far, the vaccine rollout has been confined to front-line health care workers and the retired which does not lend to job growth in the immediate future. Until the vaccine has been distributed to a meaningful portion of the population, the labor market will remain constrained.

A tenuous transfer of power in Washington also brings uncertainty to fiscal policy. With the Democrats gaining control of the White House and Congress, it will be easier to push their agenda through, fueling growth and inflation expectations for this year with tax reform on the horizon. Further fiscal support may include aid for state and local governments, enhanced unemployment benefits, and additional stimulus checks paid directly to households.

Meanwhile, the Federal Reserve remains steadfast in its commitment to ultra-low rates while ensuring robust financial conditions. President-Elect Biden’s nomination of Janet Yellen to serve as U.S. Secretary to the Treasury should ensure a productive relationship between the Fed and the new administration. Building a bridge to the other side of the pandemic remains the primary concern for all parties involved.

Current Economic Releases

GDP QoQQ3 ’2033.40%
US UnemploymentDec ’206.70%
ISM ManufacturingDec ’2060.70
PPI YoYNov ’20-1.30%
CPI YoYNov ’201.20%
Fed Funds TargetJanuary 12, 20210.00% – 0.25%

Treasury Yields


Agency Yields


Commercial Paper (A1/P1)



Source: Bloomberg
Data unaudited. Many factors affect performance including changes in market conditions and interest rates and in response to other economic, political, or financial developments. Investment involves risk, including the possible loss of principal. No assurance can be given that the performance objectives of a given strategy will be achieved. All comments and discussions presented are purely based on opinion and assumptions, not fact. These assumptions may or may not be correct based on foreseen and unforeseen events. The information above is not a recommendation to buy, sell, implement, or change any securities or investment strategy, function, or process. Any financial and/or investment decision should be made only after considerable research, consideration, and involvement with an experienced professional engaged for the specific purpose. Past performance is not an indication of future performance. Any financial and/or investment decision may incur losses.

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