--- title: "Monday Update (on Tuesday): Economic Data Shows Continuing Recovery" description: In his Monday Update, Commonwealth’s Sam Millette highlights durable goods orders, third-quarter GDP, and personal income and spending reports. image: https://blog.commonwealth.com/hubfs/Rebrand-Blog-Images/IMO-images/Monday-Update/monday-b.jpg --- [![The Independent Market Observer](https://blog.commonwealth.com/hubfs/IMO-Title-1.png "The Independent Market Observer")](https://blog.commonwealth.com/independent-market-observer) [![Commonwealth Financial Network](https://blog.commonwealth.com/hubfs/lockup_citron-1.png "Commonwealth Financial Network")](https://www.commonwealth.com/) - [Home](https://blog.commonwealth.com/independent-market-observer) - [About](https://learn.commonwealth.com/about/) ### ![print this page](https://blog.commonwealth.com/hs-fs/file-1376458285-gif/images/print.gif)Print # [Monday Update (on Tuesday): Economic Data Shows Continuing Recovery](https://blog.commonwealth.com/independent-market-observer/monday-update-economic-data-shows-continuing-recovery) Posted by [Sam Millette](https://blog.commonwealth.com/independent-market-observer/author/sam-millette) This entry was posted on Nov 3, 2020, 10:00:00 AM and tagged [In the News](https://blog.commonwealth.com/independent-market-observer/topic/in-the-news) [Leave a comment](https://blog.commonwealth.com/independent-market-observer/monday-update-economic-data-shows-continuing-recovery#comments-listing) ![In his Monday Update, Commonwealth’s Sam Millette highlights durable goods orders, third-quarter GDP, and personal income and spending reports.](https://blog.commonwealth.com/hs-fs/hubfs/Rebrand-Blog-Images/IMO-images/Monday-Update/monday-b.jpg?width=300&name=monday-b.jpg)Last week was filled with economic updates, with reports that touched on various important sectors of the economy. The data was largely positive, with better-than-expected results for durable goods orders, the third-quarter GDP report, and September’s personal income and spending reports serving as highlights. This week will be another busy one for updates, with a focus on business confidence and the October jobs report. ##### Last Week’s News On Monday, September’s **new home sales **report was released. The pace of new home sales declined by 3.5 percent during the month, from an annualized rate of 994,000 in August to 959,000 in September, against estimates for an increase to 1.03 million. Despite the modest decline, the pace of new home sales is up more than 33 percent year-over-year and remains well above pre-pandemic levels. The September slowdown in sales was likely due in large part to low inventory, as the level of available homes for sale remains near record lows. New home sales are a smaller and often more volatile portion of the overall market compared with existing home sales. Accordingly, the modest pullback is nothing to worry about, especially given the strong rebound in overall housing sales seen since reopening efforts took hold. Tuesday saw the release of the September **durable goods orders** report. Durable goods orders rose by more than expected during the month, up 1.9 percent against calls for a more modest 0.5 percent increase. Core durable goods orders, which strip out the impact of volatile transportation orders, also beat expectations, rising by 0.8 percent against calls for 0.4 percent growth. Core durable goods orders are often used as a proxy for business investment, so this result was a positive sign for business investment during the quarter. With the better-than-expected numbers in September, the level of durable goods orders is now approaching pre-pandemic levels. Looking forward, however, the uncertainty created by rising case counts and the elections could serve as a headwind for faster business investment. Tuesday also saw the release of the **Conference Board Consumer Confidence Index** for October. This widely followed measure of consumer confidence fell slightly during the month, from 101.3 in September to 100.9 in October. Economists had previously forecasted a modest increase to 102. Confidence improved notably in September, but this slight moderation is understandable given the uncertainty created by rising case counts and the upcoming election. The index still sits well below this year’s pre-pandemic high of 132.6 set in February, highlighting the work required to get back to pre-pandemic levels. Typically, improving consumer confidence supports faster spending growth, so this monthly report will continue to be widely followed. On Thursday, the first estimate for **third-quarter GDP** growth was released. The report showed the economy grew at a 33.1 percent annualized rate during the quarter, which was better than economist estimates for 32 percent annualized growth. This result marks the single best quarter for economic growth on record, as activity rebounded swiftly following the 31.4 percent annualized decline recorded in the second quarter. As expected, increased personal consumption was the major driver of this strong upturn in economic activity. Consumption grew at a 40.7 percent annualized rate during the quarter against forecasts for a 38.9 percent increase. Rising business investment also contributed to growth in the quarter. Trade served as a headwind, with the rebound in imports outstripping the recovery in exports. Despite the better-than-expected results during the quarter, the overall size of the economy is down approximately 3.5 percent from the recent peak, highlighting the damage caused in the second quarter. Economists expect to see the economy remain smaller than its pre-crisis size for a number of quarters, as rising case counts and the political uncertainty threaten to slow economic activity in the short term. Thursday also saw the release of the weekly **initial jobless claims** report for the week ending October 24. The report showed that 751,000 initial unemployment claims were filed during the week, down from 791,000 claims the week before and below economist estimates for 770,000. This report represents two straight weeks with declining initial claims and the best week for initial claims since March. Continuing unemployment claims, which are reported with a one-week lag to initial claims, also declined by more than expected, falling from 8.465 million to 7.756 million, against calls for a decline to 7.775 million. Still, despite these results, both initial and continuing claims are elevated on a historical basis, indicating that significant stress remains on the labor market. Friday saw the release of September’s **personal income** and **personal spending** reports. Both beat expectations. Spending went up 1.4 percent during the month against forecasts for 1 percent growth, and incomes rose by 0.9 percent against calls for 0.4 percent growth. These results showed the continued resilience of the American consumer in the third quarter, as we saw with the personal consumption growth in the GDP report. Incomes were boosted by additional supplemental jobless payments authorized in August, but this factor was not enough to offset a 2.5 percent decline in incomes in the month. Income growth has been very volatile throughout the pandemic, with shifting government stimulus and support leading to large swings in monthly income levels. On the other hand, spending has seen consistent growth since reopening efforts began, increasing in each of the past five months. Overall, this strong report highlighted the continued resilience in consumer spending at the end of the third quarter. Finally, we finished the week with Friday’s release of the second and final reading of the **University of Michigan consumer sentiment survey** for October. The preliminary estimate released earlier in the month showed the index rising by more than expected, from 80.4 in September to 81.2 in October. The final report showed additional improvement, with the index finishing October at 81.8 against forecasts to remain at the preliminary estimate. This result was likely driven in part by rising expectations for a Biden presidency. The sub-index of Democrat expectations surged during the month to levels last seen before the pandemic, while Republican expectations remained muted. Still, despite October’s stronger-than-expected results, the index sits well below the pre-pandemic high of 101 hit in February. ##### What to Look Forward To We started the week with Monday’s release of the **ISM Manufacturing index** for October. This gauge of manufacturer confidence rose by more than expected, going from 55.4 in September to 59.3 in October, against calls for an increase to 56. This result calmed fears that the index’s decline in September might have been the start of a negative trend. Manufacturer confidence has increased notably since hitting a lockdown-imposed low of 41.5 in April, and the index now sits well above pre-pandemic levels. This is a diffusion index, where values above 50 indicate expansion, and this result showed manufacturing expanding at the fastest pace since 2018. Ultimately, this strong report demonstrated manufacturing’s continued recovery in October despite rising case counts. Wednesday will see the release of the **international trade** report for September. Economists expect to see the trade deficit narrow from a 14-year low of $67.1 billion in August to $63.9 billion in September. Nonetheless, if estimates hold, this report would represent the second-largest monthly trade deficit since 2006. The previously released advance goods trade report showed the trade deficit for goods narrowing during the month, with exports of goods rising by 2.7 percent and imports declining by 0.2 percent. On the whole, trade volumes remain low, but imports have rebounded more quickly than exports. Looking forward, this indicates there may be room for additional export growth. If we do see such continued growth, it may be enough to serve as a tailwind for the fourth-quarter economy. Also on Wednesday, the **ISM Services index** for October is set to be released. This measure of service sector confidence is expected to show a modest decline from 57.8 in September to 57.5 in October. This is another diffusion index, where values above 50 indicate expansion, so this drop would leave the index in expansionary territory. In addition, the anticipated result would put the index above the pre-pandemic high of 57.3 it hit in February and at a level that has historically signaled 4 percent annualized GDP growth. Strong business confidence often supports additional business investment, and we saw the positive impact that increased business investment can have in the third-quarter GDP report. If estimates prove to be accurate, October would represent another strong month for service sector confidence, which would be all the more impressive given the rising case counts. On Thursday, the **initial jobless claims** report for the week ending October 31 is set to be released. Economists expect to see the number of initial filers decline from 751,000 the week before to 738,000 for the final week of October. This result would represent the lowest level of weekly initial claims since the pandemic began, but it would be more than three times higher than 2019’s weekly average. Continuing unemployment claims are also expected to decline, but it should be noted that some of the drop seen in October has likely been due to claimants exhausting their benefits rather than finding new employment. Ultimately, even with the anticipated improvement for the week, the high level of initial and continuing claims continues to indicate stress on the labor market months after lockdowns were lifted. Thursday will also see the release of the **FOMC rate decision** from the Fed’s November meeting. In March, the Fed cut rates to virtually zero as a response to the pandemic, and economists do not expect rates to be raised for the foreseeable future. Accordingly, the focus will be largely on the Fed’s statement and Fed Chair Jerome Powell’s press conference following the release. Market participants will be interested in seeing how the central bank reacts to rising case counts in October. Previously released Fed minutes showed a widespread concern among FOMC members that the pandemic presents a continued risk to the ongoing economic recovery. Given the rising medical risks since the Fed last met in September, continued supportive monetary policy is expected. Finally, we’ll finish the week with Friday’s release of the October **employment report.** Economists expect to see 600,000 jobs added during the month, down from 661,000 in September. September’s report was disappointing, coming in below expectations and marking the weakest month for job growth since the lockdowns ended. The unemployment rate is expected to have declined slightly during the past month, from 7.9 percent in September to 7.7 percent in October. While certain areas of the economy have been able to recover to or above pre-pandemic levels, employment growth is lagging in the recovery. We have recovered only about half of the 22 million jobs lost in March and April. The slowdown in the pace of hiring is concerning given the amount of people who are still unemployed. It highlights the very real work that still needs to be done in order to get the economy back to pre-pandemic levels. That’s it for this week—thanks for reading and stay safe! - [Tweet](https://twitter.com/share) ### Subscribe via Email ![TMO_IMO_615x408_sidebar](https://blog.commonwealth.com/hs-fs/hubfs/TMO_IMO_615x408_sidebar.png?width=1033&height=686&name=TMO_IMO_615x408_sidebar.png "TMO_IMO_615x408_sidebar") [Episode 20](https://vimeo.com/1201911815/0f4f028be9?share=copy&fl=sv&fe=ci) June 17, 2026 [Episode 19](https://vimeo.com/1191658257/1b43ce84dd?share=copy&fl=sv&fe=ci) May 13, 2026 [Episode 18](https://vimeo.com/1183174918/e227cf7d80?share=copy&fl=sv&fe=ci) April 15, 2026 [Episode 17](https://vimeo.com/1174554734/636f0f7aba?share=copy&fl=sv&fe=ci) March 18, 2026 [Episode 16](https://vimeo.com/1163757312/bc2f802d74?share=copy&fl=sv&fe=ci) February 11, 2026 [More](https://learn.commonwealth.com/monthly-media-placements) [![Insights_CTA_IMO_233x400-1](https://no-cache.hubspot.com/cta/default/295024/interactive-187935228457.png)](https://blog.commonwealth.com/hs/cta/wi/redirect?encryptedPayload=AVxigLI9lecJCvX2avf8SaZiLv9BL7RY9KB6GExD0mUwcYjJou7IwD0ndTrUU2b%2B2uB2baO9f27rIY2Pvi6JVZUergbMztdNNjMbLWHekOuh7MZhGuX%2BgnHkxy0SNUkrbJS0lUJhf1dsax55HH4CjbbtnOQ3WL%2BEtSbfsnsfLu3%2F62DEpxbKz8acS7A%3D&webInteractiveContentId=187935228457&portalId=295024) ### Hot Topics Select Category Ask Brad Commentary Economic Risk Factor Updates Economics Lessons Market Thoughts Videos In the News Investing Market Updates On My Bookshelf Politics and the Economy [![New Call-to-action](https://no-cache.hubspot.com/cta/default/295024/5f46d9ce-4d40-495c-a126-d4502b647bbf.png)](https://cta-redirect.hubspot.com/cta/redirect/295024/5f46d9ce-4d40-495c-a126-d4502b647bbf) ### Archives - 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