Despite Uncertain Outlook, Economic Data Exceed Expectations

This insightful monthly market commentary will help you look beyond the headlines to better understand what is driving the current market trends that could impact your credit union’s investment portfolio.

With the third quarter now in the rear-view mirror, we can only hope that the remaining three months of 2020 will bring a more positive ending to what has been a very difficult year. However, the current political theater leading up to the November election does not offer much encouragement, and several sectors of the U.S. economy continue to suffer from social distancing measures driven by COVID-19. While the Fed is taking extraordinary measures to support the economy within its defined limitations, Congress has remained at a stalemate regarding additional fiscal aid amid the ongoing pandemic. There have been some positive developments on that front in the last week, but the probability of getting a deal done before year-end still appears low.

However, it’s not all doom and gloom. Despite this negative backdrop, the economic data have continued to exceed expectations, with the Citi Economic Surprise Index holding significantly above its historical average see the image below. Will the lack of additional fiscal aid stymie this positive momentum in the fourth quarter? That is the question many economists have been pondering of late.


September At-A-Glance

  • 2020 has been a very difficult year on many fronts, and the economic outlook for the fourth quarter is less certain with Congress unable to agree on additional fiscal aid.
  • Despite the uncertainty, the economic data trend continues to exceed expectations, although the September jobs report surprised to the downside.
  • The September FOMC statement included a change to the Fed’s forward guidance to account for the recent policy framework shift to average inflation targeting, and the updated Summary of Economic Projections shows no change in the fed funds rate through 2023.

Continuing the economic data discussion, the housing market continues to perform well on a national basis, including home sales and prices. Core capital goods orders significantly exceeded expectations in August, suggesting business investment is rebounding despite general uncertainty related to COVID-19 and the election. However, the retail sector continues to face significant challenges. To be clear, these challenges did not begin with COVID-19, not in the age of Amazon and other digital marketplaces, but the pandemic has clearly expedited the demise of many U.S. retailers. According to the biannual bankruptcy report from BDO, 29 retailers have filed for Chapter 11 through August. That number is on pace to eclipse the record of 49 retail business failures in 2010, in the wake of the financial crisis.

Read more about the latest economic data and overall market trends here.

This market overview is provided by ALM First Financial Advisors, LLC, the investment advisor for Trust for Credit Unions. Read more from ALM First about the latest economic data releases and overall market trends at


October 6, 2020

Keep Reading

View all posts in:
More on:
Scroll to Top