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Economic Fundamentals Recovering As Stocks Surged For the Week

(Friday, July 3, 2020, 7 p.m. EST) Here's a snapshot of the key fundamentals showing the economic recovery from the Covid crisis.

Only about 12% of U.S. economic growth is derived from manufacturing activity but the new numbers, based on a monthly survey of purchasing managers at large companies, shows a surge was underway. Bottoming at 43.1% in May, the survey results surged in June to 52.6%. While a surge in manufacturing activity had been expected, the surge in the purchasing managers index exceeded expectations.

Three million jobs had been expected to be added to the economy, as business activity haltingly moved toward normalcy. Amid risk of Covid spread, 4.8 million new jobs were added to the economy in June, according to the Bureau of Labor Statistics, far exceeding expectations.

Also exceeding expectations: The unemployment rate dropped to 11.1% in June, from 13.3% in May and the April peak of 14.7%. The June forecast had been for 12.2%.

The economy lost more than 20 million jobs in the Covid crisis. The return to full employment is in process, but it is expected to take about three years to get back to the peak employment level of late 2019.

Total employment peaked at 152 million jobs in February 2019 and in the crisis fell to 130 million in April. It rebounded to 138 million last month.

Wall Street was closed for business Friday for July Fourth.

The Standard & Poor's 500 (S&P 500) for the week ended Thursday at 3,130.01, gaining 3.94% from last week and up 33.26% from the March 23rd Covid bear market low.

Stock prices have swung wildly since the crisis started in March and volatility is to be expected in the months ahead.

The S&P 500 fell by -2.4% a week ago after a +4.8% gain a week before, which followed a 3% gain and a 3.2% gain two weeks earlier.

Near-term risk of the virus crisis, which continues to fluctuate and attract speculation, should not influence your long-term financial plan.

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