My colleague Sam Millette, senior investment research analyst on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Economic Risk Factor Update. Thanks for the assist, Sam!

The economy continued to show signs of growth in November, but the data weakened as the third wave of the pandemic slowed economic activity. Job growth slowed substantially, and service sector and consumer confidence both declined. Despite the slowdown, however, growth has continued as the economy continues to adapt. While the pandemic is indeed acting as a growing headwind, the recovery continues to be surprisingly resilient.

Last week saw a number of economic updates, with a focus on business confidence, the November jobs report, and October’s international trade report. This week will be relatively quiet, with November’s inflation reports and a first look at consumer sentiment in December serving as highlights.

This morning’s jobs report was a disappointment. Total new jobs came in at 245,000. This result was well below the 460,000 expected and even further below the 638,000 we saw last month. Looking under the hood, the details were not great either. Private job growth dropped from a strong 906,000 last month to 344,000, again well below the expected 540,000. Even if we adjust for the effects of expiring temporary census jobs, at 93,000, this is still a notable weakening of what until now had been a very resilient employment picture.

We still do not know whether the third wave of the pandemic has peaked. While we saw a significant downturn in case growth in the past week, that may have been due to the Thanksgiving holiday, where cases reported dropped off, rather than to an actual decline in cases. We are now seeing cases surge again, as case reporting of earlier cases is catching up. Again, this is likely due to the holiday rather than an actual surge. There does seem to be continued improvement overall, but we need a couple of weeks for the data to normalize until we can be sure.

November was a great month for the markets. In fact, it was one of the best on record. U.S. markets were up by double digits, as were most markets around the world. We saw new all-time highs here, and even fixed income had a good month. From an investor’s point of view, things looked not just good but great—and clearly markets expect even better times ahead. But do they have it right? Let’s take a closer look.

November was a very strong month for the stock markets, with most up by double digits. With good news on vaccines and the resolution of the presidential election, investors gained confidence. But medical risks remain, and the economic risks rose. Layoffs increased, and consumer confidence declined. Business confidence remained high but has pulled back.

Last week, a number of important economic data releases came in with mixed results. Disappointing consumer confidence reports and rising initial unemployment claims provided a contrast for better-than-expected reports on October durable goods orders and personal spending. This week will be another busy one for updates, with November’s business confidence and employment reports serving as highlights.

Today, I'd like to provide an update on the coronavirus, including the economic and market implications. On the medical front, we’ve seen significant improvements. Case growth has shown signs of topping, indicating the third wave may be about to crest. Further, three vaccines were announced as effective and safe in the past two weeks. While the pandemic is still in force and there is a potential risk from Thanksgiving gatherings, the trends may be starting to reverse.

This weekly update is appearing a couple of days early, due to Thanksgiving. We will go back to the regular Thursday schedule next week. I hope everyone has a terrific holiday. As always, I am grateful for all of you my friends and readers.

Last week saw a number of important economic data releases, with a disappointing October retail sales report and strong housing market updates serving as highlights. This week will be busy, as well as holiday-shortened, with a focus on November’s consumer confidence reports, the first look at durable goods orders in October, and the monthly personal income and spending reports.