The Pulse – What’s happening in the Economy and the Capital Markets: 12/19/20 – 12/31/20

January 4, 2021

Executive Summary

2020 ended with a strong December for the markets as momentum continued from November’s events. Economic data continues to be mixed with improvements in industrial-related data and varied consumer data. Mastercard reported online commerce grew rapidly this holiday season. The labor market is improving; however, all unemployment numbers remain elevated compared to historical levels.

The Markets

The markets finished the year on a high note thanks to the COVID-19 vaccine rollout and expectations of global economic recovery in the second half of 2021. More economically sensitive markets, such as small caps (e.g. Russell 2000), emerging markets and the energy sector were leaders for December. Indexes that reflect broader economies, such as the S&P 500 and Dow Jones, as well as those that comprise the developed markets, all also increased.

The Pulse Market Chart 1.4.2020

December 2020 followed historical suit, reflecting positive trends.

A global and controversial factor in December was the regulatory environment for large technology companies.

  • The Chinse government exerted influence over Alibaba and its public offering of its Alipay affiliate, while the U.S. and European governments further scrutinized Google’s parent, Alphabet, and Facebook.
  • Regulators with economically suffering constituents are keeping eyes on larger and tremendously profitable companies whose business models enabled weathering the COVID-19 recession and those whose stock prices increased due to their fortress balance sheets.

The Economic News

Mastercard’s SpendingPulse™ survey revealed that online sales grew 49% during the 2020 holiday season, compared to 2019.

  • Online commerce accounted for roughly 20% of overall retail sales versus 13% in 2019.
  • Home furnishings experienced the strongest growth of any sector – +16% overall and 31% online growth.
  • Home improvement increased 14%, with online sales up 80%.

High-frequency data continues to show modest improvements month over month (e.g. staffing index, gasoline demand, air travel) as the economy generally, though unevenly, improves.

  • Most notable is the improvement in air travel with several days exceeding 1 million passengers. Leisure travel during the holidays was a large driver of the improvement.
  • Lodging is still weak, despite the improvements in air travel.
High Frequency chart the pulse 1.4.2021

The end of year government data, which includes November activity, highlighted a more concerned consumer and manufacturing data that was slightly weaker than expected.


Consumer Confidence (source: the Conference Board) was significantly below expectations and well below October.

  • “Present situation” component was 90.3 versus 105.9 in October

Personal Income declined 1.1%, slightly worse than expected and below October

Personal Spending declined 0.4%, slightly worse than expected and much worse than October’s growth of 0.3%.


Durables Goods (ex-Transportation) November projected at 0.4%, below expectations and below October’s 1.3% gain.

Capital Good Orders (a leading indicator) November projected at 0.4%, below expectations and below October’s 1.6% gain.

Focus of the Week – The Labor Market

The labor market has been at the epicenter of the COVID-19 recession.

Coming into 2020, the labor market had multi-decade low rates of Under-employment and Un-employment.

*Under-employment includes impact from part-time and marginal labor force.

The job destruction from COVID-19 and requisite shutdowns were massive. The economy has recovered a little more than half the damage from the initial shutdowns, however, remains at 2014 levels, having lost roughly half a decade’s improvements.

Under-employment (U-6) Rate – 12.0%

The Unemployment Rate shows a similar story, though job recovery has only reached 2013 levels.

Unemployment (U-3) Rate – 6.7%

The Pulse Underemployment u-3 chart

The Labor Market still has significant healing ahead.

  • Initial jobless claims are still at record levels and well above peaks of prior recessions, even though down 90% from the March highs.

*Initial jobless claims are those filing for unemployment insurance for the first time

Initial Filings – 787,000

Initial Filings – 787,000 chart

Note: Shading = recessions

Continuing Claims – 5,219,000

Continuing Claims – 5,219,000 chart

Workers continuing to file for unemployment insurance tells a similar story to Initial Claims – the primary difference is that Continuing Claims are below the levels of the Financial Crisis.

A Few Stories that Caught My Eye


Investment advisory services are offered by Aprio Wealth Management, LLC, a Securities and Exchange Commission Registered Investment Advisor.  Opinions expressed are as of the current date (January 4, 2021) and subject to change without notice. Aprio Wealth Management, LLC shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, the information, data, analyses or opinions contained herein or their use, which do not constitute investment advice, are provided as of the date written, are provided solely for informational purposes and therefore are not an offer to buy or sell a security. This commentary is for informational purposes only and has not been tailored to suit any individual. References to specific securities or investment options should not be considered an offer to purchase or sell that specific investment.

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About the Author

Simeon Wallis

Chief Investment Officer At Aprio Wealth Management At Aprio Simeon is the Chief Investment Officer of Aprio Wealth Management and the Director of Aprio Family Office. Simeon brings two decades of professional investing experience in publicly traded and privately held companies, as well as senior-level operating and strategy consulting experiences.