Some warning signs have started flashing for fundraisers in the Chronicle’s monthly update on key economic indicators. While overall growth remains strong, consumer confidence fell, the stock market was flat, and unemployment remains stuck well above pre-pandemic levels.
The following indicators, which experts say are important to nonprofits showed notable developments since our previous economic update.
Consumer Confidence
Down 6.2 percent from April
Consumers were a bit shaken by forecasts of higher inflation possibly to come this year, which could put a dent in their spending power just as the economy is reopening, according to the University of Michigan’s preliminary May 2021 Consumer Sentiment Index, which dropped from 88.3 in April to 82.8 in May out of a possible maximum score of 100.
According to the survey, consumers’ long-term expectations remain optimistic: Most anticipate a booming economy with a high rate of hiring over the next year.
Gross Domestic Product
Strong growth in the first quarter; even stronger growth ahead
More detailed number-crunching from the Bureau of Economic Analysis released Thursday confirmed its estimate issued last month of a 6.4 percent annualized rate of GDP growth in the first quarter of this year.
Earlier this month, the Conference Board — a prominent research nonprofit that has been analyzing economic data since the 1930s —projected even stronger economic growth in the second quarter of 2021, forecasting an 8.6 percent annualized increase.
It’s growth forecast for the full year is 6.4 percent.
“The primary driver of this rapid expansion will be a surge in consumer spending as the economy fully reopens,” reads the report.
Stock Market
Dow Jones Industrial, S&P 500 hold steady in May; Nasdaq drops
Major stock-market indices are on track to end the month of May with little change, boosted slightly by continued good news in GDP growth and employment numbers. As the markets closed out the month, the Dow Jones Industrial Average was up roughly 1 percent from the end of April, while the S&P 500 was up less than 0.3 percent. The Nasdaq Composite index performed the worst of the major indices, down more than 2 percent.
Unemployment
6.1 percent in April, up from 6 percent in March
The unemployment rate ticked up slightly from March to April but has basically been around 6 percent since December, according to the Department of Labor’s Bureau of Labor Statistics. In the months before the pandemic, the unemployment rate hovered around 3.5 percent.
Roughly 9.8 million people remain unemployed, well above pre-Covid levels.
Hiring remained flat in April across the nonprofit sector, adding only 18,000 jobs that month, according to estimates from the Johns Hopkins University Center for Civil Society Studies.
In other employment news, in the week ending May 22, the number of weekly initial unemployment insurance claims fell for the fourth week in a row to 406,000, according to the Bureau of Economic Analysis. It’s the lowest rate seen since March 14, 2020, before the impact of the pandemic was fully felt in the U.S. economy.
