Month: December 2021

The Markets (as of market close December 23, 2021)

Wall Street closed the holiday-shortened week at record levels as investors seemed to speculate that the economic recovery could weather the growing number of coronavirus cases. The S&P 500 closed the week at a record high. The Nasdaq and the Russell 2000 ended up over 3.0%. Ten-year Treasury yields, gold, and crude oil prices climbed higher, while the dollar dipped lower. The market sectors were mixed, with consumer discretionary, communication services, and information technology leading the gainers.

Stocks slid last Monday. Fears that the Omicron variant could undercut the economic rebound, coupled with a setback to President Joe Biden’s social-spending bill, was enough to send stocks reeling. Each of the benchmark indexes listed here fell by at least 1.0%, with the small caps of the Russell 2000 dipping 1.6% to lead the declines. Ten-year Treasury yields inched higher, while the dollar and crude oil prices fell. Materials, consumer discretionary, financials, and industrials led the declines among the market sectors.

Equities jumped higher last Tuesday, reversing course from what had been the biggest three-day drop since September. While the Omicron variant continued to rage around the world, the White House indicated that widespread lockdowns were not anticipated and suggested that any negative impact of the latest virus strain on economic activity would be relatively short and shallow. The Russell 2000 and the Nasdaq each gained more than 2.0%, while the remaining benchmark indexes listed here advanced by at least 1.6%. Bond prices fell, sending yields higher. Crude oil prices, which had dipped below $69.00 per barrel, climbed to $71.46 per barrel. The dollar was relatively unchanged. Energy, consumer discretionary, information technology, and financials led the market sectors.

Wall Street ended last Wednesday in the black with several benchmark indexes closing near session highs. Information technology and consumer discretionary led the way on a day when no market sector lost value. The Nasdaq finished up 1.2%, followed by the S&P 500 (1.0%), the Russell 2000 and the Global Dow (0.9%), and the Dow (0.8%). Ten-year Treasury yields and the dollar dipped, while crude oil prices pushed higher, closing at $72.95 per barrel.

Thursday was the last trading day of the week, as the markets closed Friday in observance of the Christmas holiday. Despite low trading volume, each of the benchmark indexes listed here posted solid gains, with the Global Dow, the Nasdaq, and the Russell 2000 gaining 0.9%. The Dow and the S&P 500 advanced 0.6%. Treasury yields and crude oil prices climbed higher, while the dollar was unchanged. Consumer discretionary, materials and industrials led the market sectors.

The national average retail price for regular gasoline was $3.295 per gallon on December 20, $0.020 per gallon less than the prior week’s price but $1.071 higher than a year ago. Gasoline production decreased during the week ended December 17, averaging 9.9 million barrels per day. U.S. crude oil refinery inputs averaged 15.8 million barrels per day during the week ended December 17 — 148,000 barrels per day more than the previous week’s average. Refineries operated at 89.6% of their operable capacity, the same level as the prior week.

Stock Market Indexes

Market/Index	2020 Close	Prior Week	As of 12/23	Weekly Change	YTD Change
DJIA	30,606.48	35,365.44	35,950.56	1.65%	17.46%
Nasdaq	12,888.28	15,169.68	15,653.37	3.19%	21.45%
S&P 500	3,756.07	4,620.64	4,725.79	2.28%	25.82%
Russell 2000	1,974.86	2,173.93	2,241.58	3.11%	13.51%
Global Dow	3,487.52	4,027.91	4,109.07	2.01%	17.82%
Fed. Funds target rate	0.00%-0.25%	0.00%-0.25%	0.00%-0.25%	0 bps	0 bps
10-year Treasuries	0.91%	1.40%	1.49%	9 bps	58 bps
US Dollar-DXY	89.84	96.67	96.06	-0.63%	6.92%
Crude Oil-CL=F	$48.52	$71.87	$73.78	2.66%	52.06%
Gold-GC=F	$1,893.10	$1,800.50	$1,810.00	0.53%	-4.39%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• The economy accelerated at an annualized rate of 2.3%, according to the third and final estimate of the third-quarter gross domestic product. In the second quarter, the GDP increased 6.7%. The third-quarter advance reflected increases in private inventory investment, personal consumption expenditures, state and local government spending, and nonresidential fixed investment that were partly offset by decreases in exports, residential fixed investment, and federal government spending. Imports, which are a negative in the calculation of GDP, increased. The deceleration in third-quarter GDP compared to the second quarter was more than accounted for by a slowdown in personal consumption expenditures, as spending for goods declined (led by a decrease in motor vehicles and parts), while spending on services also fell (led by a decrease in food services and accommodations). The personal consumption expenditures price index increased 5.3% in the third quarter, compared with an increase of 6.5% in the second quarter. Excluding food and energy prices, the PCE price index increased 4.6% in the third quarter, compared with an increase of 6.1% in the previous quarter.
• Inflationary pressures continued to be felt in November. According to the latest data from the Bureau of Economic Analysis, prices for consumer goods and services rose 0.6% in November and are up 5.7% over the past 12 months. Excluding food and energy, prices were up 0.5% for November and 4.7% year over year. Personal income increased 0.4% in November as wages and salaries rose 0.5%. Consumer spending also advanced in November, climbing 0.6% following a 1.4% jump in October.
• Existing home sales rose for the third consecutive month in November. According to the latest data from the National Association of Realtors®, existing home sales accelerated at a rate of 1.9% from October. Sales are still 2.0% below their pace from a year ago. According to the report, the rise in sales may be attributable to buyers trying to make home purchases before mortgage rates rise further in the coming months. The median existing home price for all housing types in November was $353,900, the same price as in October, but 13.9% above the November 2020 price. Total housing inventory at the end of November sat at a 2.1-month supply, down from 2.4 months in October. Single-family home sales rose 1.6% in November. The median existing single-family home price was $362,600 in November, up from October’s price of $360,800.
• Sales of new single-family homes rose by 12.4% in November compared to the previous month. Nevertheless, sales of new single-family homes were 14.0% below the November 2020 estimate. The median sales price of new houses sold in November was $416,900 ($408,700 in October). The average sales price was $481,700 ($478,200 in October). Available inventory of new single-family homes for sale in November was 402,000, which represents a supply of 6.5 months at the current sales pace.
• New orders for manufactured durable goods in November increased $6.5 billion, or 2.5%, to $268.3 billion, according to the U.S. Census Bureau. This increase, up six of the last seven months, followed a 0.1% October increase. Excluding transportation, new orders increased 0.8%. Excluding defense, new orders increased 2.0%. Transportation equipment, up following two consecutive monthly decreases, led the increase, climbing $5.0 billion, or 6.5%, to $82.1 billion. Items of particular note include new orders for computers and electronic products, which rose 4.0%; communications equipment advanced 11.1%; and nondefense aircraft and parts jumped 34.1%. New orders for capital goods increased 5.5%, with defense capital goods advancing 16.0%. In November, shipments and unfilled orders rose 0.7%, while inventories advanced 0.6%.
• For the week ended December 18, there were 205,000 new claims for unemployment insurance, unchanged from the previous week’s level, which was revised down by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended December 11 was 1.4%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended December 11 was 1,859,000, a decrease of 8,000 from the prior week’s level, which was revised up by 22,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, last year at this time there were 803,000 initial claims for unemployment insurance, and the rate for unemployment claims was 3.7%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended December 4 were Alaska (3.1%), the Virgin Islands (2.9%), Puerto Rico (2.5%), California (2.4%), New Jersey (2.4%), the District of Columbia (2.2%), Minnesota (2.2%), Hawaii (1.9%), Illinois (1.8%), and Massachusetts (1.8%). The largest increases in initial claims for the week ended December 11 were in Missouri (+7,344), Kentucky (+3,600), Illinois (+1,171), Nebraska (+1,032), and Tennessee (+705), while the largest decreases were in New York (-8,157), North Carolina (-4,320), Texas (-4,086), Wisconsin (-3,214), and Oregon (-1,982).

Eye on the Week Ahead

There isn’t much economic data available this week, other than the advance report in the international trade in goods for November. The week between Christmas and New Year’s Day is typically a slow week for trading.

The Markets (as of market close December 17, 2021)

Omicron, escalating prices, and the tightening of monetary policy by central banks in the United States and around the world took center stage last week. The prospect of higher interest rates in 2022 could make it less appealing to own riskier investments. All of the stock market indexes ended the week in the red, with the tech-heavy Nasdaq taking the biggest hit. Ten-year Treasury yields fell 8 basis points, and the price of gold increased, as some investors took a more defensive stance. The dollar rose and crude oil prices fell, albeit slightly.

Worries about the fast-spreading COVID-19 variant caused U.S. stocks to fall back from a record high on Monday. The Nasdaq and the Russell 2000 led the retreat, both falling 1.4%, while the S&P 500 and the Dow fell 0.9%. The Global Dow was flat. Ten-year Treasury yields dropped to close at 1.42%, and crude oil prices declined slightly, while the dollar advanced. The market sectors were also mixed, with real estate, utilities, and consumer staples showing strength, while energy, consumer discretionary, and information technology lagged.

Stocks dropped again last Tuesday, as a larger-than-expected jump in producer prices caused investors to fret about the potential for more aggressive Fed action against inflation. The Nasdaq posted the largest loss (-1.1%), followed by the Russell 2000 (-1.0%), the S&P 500 (-0.8%), the Dow (-0.3%), and the Global Dow (-0.2%). Crude oil prices slipped after the International Energy Agency announced that the global oil market has returned to surplus due to fast-spreading Omicron and the resulting reduction in oil demand.

On Wednesday, news that a more hawkish Federal Reserve now expects to wind down stimulus and raise interest rates more rapidly than previously thought was well received by investors. Each of the benchmark indexes listed here posted gains, led by the Nasdaq, which bounced back 2.2%. The Russell 2000 gained 1.7%, followed by the S&P 500 (1.6%), the Dow (1.1%), and the Global Dow (0.3%). The 10-year Treasury yield inched up to 1.46%.

A sharp drop in the shares of large technology companies dragged the U.S. stock market lower last Thursday. The Nasdaq dropped 2.5%, marking the fourth consecutive day that prices swung more than 1% in either direction. The Russell 2000 (-2.0%), the S&P 500 (-0.9%), and the Dow (-0.1%) also fell, while the Global Dow rose (1.0%). Information technology and consumer discretionary suffered the largest declines. Despite losses in the major benchmark indexes, 8 of the market’s 11 sectors saw gains, led by financials and materials. Treasury yields ticked down, the dollar weakened, and crude oil prices rose.

Equities generally closed lower after a volatile week on Friday. The Russell 2000 stood out by posting a 1.0% gain. The Dow declined 1.5%, followed by the S&P 500 (-1.0%) and the Global Dow (-0.9%). The Nasdaq was flat. Treasury yields dipped, crude oil prices dropped, and the dollar advanced. All of the market sectors lost ground, with financials (-2.3%) and energy (-2.2%) tumbling the furthest.

The national average retail price for regular gasoline was $3.315 per gallon on December 13, $0.026 per gallon less than the prior week’s price but $1.157 higher than a year ago. Gasoline production increased during the week ended December 10, averaging 10.0 million barrels per day. U.S. crude oil refinery inputs averaged 15.7 million barrels per day during the week ended December 10 — 115,000 barrels per day less than the previous week’s average. Refineries operated at 89.8% of their operable capacity, the same level as the prior week.

Stock Market Indexes

Market/Index	2020 Close	Prior Week	As of 12/17	Weekly Change	YTD Change
DJIA	30,606.48	35,970.99	35,365.44	-1.68%	15.55%
Nasdaq	12,888.28	15,630.60	15,169.68	-2.95%	17.70%
S&P 500	3,756.07	4,712.02	4,620.64	-1.94%	23.02%
Russell 2000	1,974.86	2,211.81	2,173.93	-1.71%	10.08%
Global Dow	3,487.52	4,052.90	4,027.91	-0.62%	15.49%
Fed. Funds target rate	0.00%-0.25%	0.00%-0.25%	0.00%-0.25%	0 bps	0 bps
10-year Treasuries	0.91%	1.48%	1.40%	-8 bps	49 bps
US Dollar-DXY	89.84	96.05	96.67	0.65%	7.60%
Crude Oil-CL=F	$48.52	$71.97	$71.87	-0.14%	48.12%
Gold-GC=F	$1,893.10	$1,782.60	$1,800.50	1.00%	-4.89%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• Producer prices advanced 0.8% in November after climbing 0.6% in each of the previous three months. Producer prices have risen 9.6% over the past 12 months ended in November, the largest 12-month increase in the history of the index (November 2010). Prices for final demand less foods, energy, and trade services increased 6.9% from the previous November, the largest advance since 12-month data was first calculated in August 2014. Prices for final demand services rose 0.7% in November, the eleventh consecutive advance, while prices for final demand goods rose 1.2%. The advances in producer prices for goods and services were broad based.
• Retail sales rose 0.3% in November after an increase of 1.8% in October, confirming that some holiday spending was pulled forward in anticipation of supply shortages and rising prices. On the whole, consumers have been willing and able to spend this year. For the 12 months ended in November, retail sales were up 18.2%, and retail trade sales were up 16.1%. Gasoline station sales increased 1.6% in November and were up 52.3% from November 2020, while food services and drinking places increased 3.9% and were 37.4% above last year.
• Import prices increased 0.7% last month following a 1.5% increase in October. Natural gas prices jumped 27.4% in November, but both higher fuel and nonfuel prices contributed to the advance. Prices for imports rose 11.7% since November 2020, the largest 12-month increase since the year ended September 2011. Overall, import fuel prices increased 86.1% over the past 12 months. Petroleum prices have risen 85.8% for the year, while natural gas prices have risen 108.7%. Prices for U.S. exports rose 1.0% in November after a 1.6% advance in October. U.S. export prices were up 18.2% since November 2020, the largest 12-month advance since the data was first published in September 1984.
• The Federal Reserve decided to keep the target range for the federal funds rate at 0%-0.25%. Inflation has exceeded 2% for some time, but the Committee expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment. In light of inflation developments and further improvement in the labor market, the Committee will reduce the monthly pace of its net asset purchases by $20 billion for Treasury securities and $10 billion for agency mortgage-backed securities. Published projections showed that Fed officials believe economic conditions will call for three rate increases in 2022.
• The number of building permits for new residential construction rose 3.6% in November. Building permits for single-family construction increased 2.7%. Overall, the number of building permits issued for residential construction is 0.9% above the November 2020 rate. Housing starts surged 11.8% last month, along with single-family housing starts (11.3%). Housing completions rose 4.1% in November from the previous month and were 3.1% above the November 2020 pace. Single-family home completions were essentially unchanged.
• Industrial production rose 0.5% in November after rising 1.7% in October. For the industrial sector as a whole, non-energy production advanced 0.9%, while the output of energy goods fell 0.4%. Manufacturing output rose 0.7% last month, led by a 2.2% gain in motor vehicles and parts. Overall, total industrial production in November was 5.3% above its year-earlier level and the highest since September 2019. Capacity utilization for the industrial sector improved 0.3 percentage point to 76.8%, but was still 2.8 percentage points below its long-run (1972-2020) average.
• For the week ended December 11, there were 206,000 new claims for unemployment insurance, a decrease of 18,000 from the previous week’s level, which was revised up by 4,000. The four-week moving average was 203,750, the lowest level for this average since November 15, 1969. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended December 4 was 1.4%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended December 4 was 1,845,000, a decrease of 154,000 from the prior week’s level, which was revised up by 7,000. For comparison, last year at this time there were 929,000 initial claims for unemployment insurance, and the rate for unemployment claims was 3.7%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended November 27 were Alaska (3.2%), California (2.9%), the Virgin Islands (2.7%), the District of Columbia (2.6%), Puerto Rico (2.6%), New Jersey (2.5%), Hawaii (2.3%), Illinois (2.2%), Minnesota (2.2%), and Georgia (2.1%). The largest increases in initial claims for the week ended December 4 were in Texas (+8,639), New York (+8,523), California (+8,487), Michigan (+4,182), and Illinois (+3,390), while the largest decreases were in Virginia (-3,096) and North Carolina (-1,718).

Eye on the Week Ahead

In consideration of the Christmas-New Year holidays next week, several important economic reports are available this week. The final report on third-quarter gross domestic product is available this week. The economy advanced at an annualized rate of 2.1%, according to the second estimate. November data on sales of new and existing homes is also out this week. October proved to be a good month for the housing sector, although residential sales may curtail a bit in November. The personal income and outlays report is also out, albeit a week earlier than normal. According to the previous report, prices at the consumer level have risen 5.0% for the 12 months ended in October.

The Markets (as of market close December 10, 2021)

Stocks closed last week higher for the first time in three weeks. The S&P 500 enjoyed its best weekly gain since February. Fears over the effects of the Omicron variant on economic growth seemed to subside somewhat as each of the benchmark indexes recorded notable gains. Information technology drove much of the rally, advancing 6.0% last week. Markets also seemed to react to favorable economic news. Weekly unemployment claims were the lowest since 1969, while the number of new jobs available rose to 11.0 million. Inflation rose again, but in line with expectations, reinforcing the premise that the Federal Reserve will accelerate the tapering of its bond purchases. The Dow posted the largest weekly gain, followed by the S&P 500, the Nasdaq, the Global Dow, and the Russell 2000. Treasury yields and crude oil prices advanced, while the dollar and gold prices dipped.

Investors turned more bullish last Monday following a stretch of volatility sparked by concerns over the spread of the Omicron variant. Each of the benchmark indexes listed here posted gains, led by the Russell 2000 (2.1%), followed by the Dow (1.9%), the Global Dow (1.3%), the S&P 500 (1.2%), and the Nasdaq (0.9%). Yields on 10-year Treasuries jumped 678 basis points to 1.43%. Crude oil prices climbed to $69.95 per barrel, while the dollar was mixed.

Last Tuesday, Wall Street staged the biggest rally since March on hopes that the Omicron variant won’t weaken the economy. Tech stocks, which had been floundering, led the charge, pushing the Nasdaq up 3.0%, followed by the Russell 2000 (2.3%), the S&P 500 (2.1%), the Global Dow (1.6%), and the Dow (1.4%). Each of the market sectors advanced, led by information technology, consumer discretionary, and energy. Ten-year Treasury yields climbed to 1.48%. Crude oil prices rose to $71.54 per barrel. The dollar was unchanged.

Stocks continued to push higher last Wednesday as the S&P 500 and the Nasdaq inched toward record highs. The small caps of the Russell 2000 led the indexes, gaining 0.8%, ahead of the Nasdaq (0.6%), the S&P 500 (0.3%), the Global Dow (0.3%), and the Dow (0.1%). Yields on 10-year Treasuries rose again, reaching 1.5% at the close of trading. The dollar fell, while crude oil prices advanced for the third consecutive day, hitting $72.62 per barrel. Among the market sectors, communication services (0.8%) and health care (0.7%) climbed higher, while financials (-0.5%) and consumer staples (-0.4%) fell.

The three-day stock market rally ended last Thursday as losses in consumer discretionary, information technology, and real estate led the market lower. The volatile Russell 2000 dropped the furthest, down 2.3%, followed by the Nasdaq (-1.7%), the S&P 500 (-0.7%), and the Global Dow (-0.4). The Dow was little changed. Bond prices rose, pulling yields lower. Crude oil prices fell to $70.49 per barrel. The dollar inched higher. Among the market sectors, only health care and consumer staples posted gains.

Equities closed out the week on a high note last Friday. Several of the benchmark indexes listed here posted solid gains, led by the S&P 500 (1.0%), followed by the Nasdaq (0.7%), the Dow (0.6%), and the Global Dow (0.3%). The Russell 2000 dipped 0.4%. Ten-year Treasury yields inched higher, while crude oil prices rose 1.5% to $71.97 per barrel. The dollar slipped lower. Many market sectors rose, with information technology, consumer staples, and energy leading the way.

The national average retail price for regular gasoline was $3.341 per gallon on December 6, $0.039 per gallon less than the prior week’s price but $1.185 higher than a year ago. Gasoline production decreased during the week ended December 3, averaging 9.6 million barrels per day. U.S. crude oil refinery inputs averaged 15.8 million barrels per day during the week ended December 3 — 153,000 barrels per day more than the previous week’s average. Refineries operated at 89.8% of their operable capacity, up from the prior week’s level of 88.8%.

Stock Market Indexes

Market/Index	2020 Close	Prior Week	As of 12/10	Weekly Change	YTD Change
DJIA	30,606.48	34,580.08	35,970.99	4.02%	17.53%
Nasdaq	12,888.28	15,085.47	15,630.60	3.61%	21.28%
S&P 500	3,756.07	4,538.43	4,712.02	3.82%	25.45%
Russell 2000	1,974.86	2,159.31	2,211.81	2.43%	12.00%
Global Dow	3,487.52	3,944.60	4,052.90	2.75%	16.21%
Fed. Funds target rate	0.00%-0.25%	0.00%-0.25%	0.00%-0.25%	0 bps	0 bps
10-year Treasuries	0.91%	1.34%	1.48%	14 bps	57 bps
US Dollar-DXY	89.84	96.17	96.05	-0.12%	6.91%
Crude Oil-CL=F	$48.52	$66.16	$71.97	8.78%	48.33%
Gold-GC=F	$1,893.10	$1,783.80	$1,782.60	-0.07%	-5.84%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• Inflationary pressures are showing no signs of moderating following the latest Consumer Price Index report. Prices rose 0.8% in November after advancing 0.9% in October. Over the last 12 months, the CPI has risen 6.8%, the largest 12-month increase since the period ended June 1982. The November price hike was the result of broad increases in most component indexes, similar to the previous month. The indexes for gasoline (6.1%), shelter (0.5%), food (0.7%), used cars and trucks (2.5%), and new vehicles (1.1%) were among the larger contributors. The energy index rose 3.5% in November. The fuel oil index increased 3.5%. Within the food index, the index for food at home rose 0.8%. The apparel index climbed 1.3%.
• The international trade in goods and services deficit was $67.1 billion in October, down $14.3 billion, or 17.6%, from $81.4 billion in September. October exports were $223.6 billion, $16.8 billion, or 8.1%, more than September exports. October imports were $290.7 billion, $2.5 billion, or 0.9%, more than September imports. Year to date, the goods and services deficit increased $161.7 billion, or 29.7%, from the same period in 2020. Exports increased $315.1 billion, or 17.9%. Imports increased $476.8 billion, or 20.7%. Of particular note in October relative to the trade in goods (excluding services), the deficit with China decreased $3.2 billion to $28.3 billion; the deficit with the European Union decreased $2.1 billion to $16.6 billion; the deficit with Mexico increased $0.8 billion to $9.7 billion. On the other hand, the October figures show trade in goods surpluses, in billions of dollars, with South and Central America ($4.5), Hong Kong ($2.6), Brazil ($1.3), the United Kingdom ($1.0), and Singapore ($0.5).
• November, the second month of fiscal year 2022, saw the budget deficit grow to $191.3 billion. The October deficit was $165.1 billion. In November, government receipts were little changed at $281.2 billion. Government outlays increased by $23.5 billion to $472.5 billion in November. For the first two months of the fiscal year, the government deficit sits at $356.4 billion, $73.0 billion less than the same period in the previous fiscal year.
• The number of job openings increased in October, according to the latest Job Openings and Labor Turnover Summary. Job openings increased to 11.0 million (+431,000) and the job openings rate inched up 0.2 percentage point to 6.9%. Job openings increased in several industries with the largest increases in accommodation and food services (+254,000); nondurable goods manufacturing (+45,000); and educational services (+42,000). Job openings decreased in state and local government, excluding education (-115,000). The number of hires, at 6.5 million, was little changed from September. Total separations edged down to 5.9 million (-255,000). Within separations, the number of quits decreased 205,000 to 4.2 million, while the number of layoffs and discharges was little changed at 1.4 million. Over the 12 months ended in October, hires totaled 73.8 million and separations totaled 68.1 million, yielding a net employment gain of 5.7 million.
• For the week ended December 4, there were 184,000 new claims for unemployment insurance, a decrease of 43,000 from the previous week’s level, which was revised up by 5,000. This is the lowest level for initial claims since September 6, 1969, when it was 182,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended November 27 was 1.5%, an increase of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended November 27 was 1,992,000, an increase of 38,000 from the prior week’s level, which was revised down by 2,000. For comparison, last year at this time there were 853,000 initial claims for unemployment insurance, and the rate for unemployment claims was 4.0%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended November 20 were Alaska (2.9%), the District of Columbia (2.8%), New Jersey (2.3%), Puerto Rico (2.3%), California (2.1%), Hawaii (1.8%), Minnesota (1.8%), Nevada (1.8%), Illinois (1.7%), and Massachusetts (1.7%). The largest increases in initial claims for the week ended November 27 were in North Carolina (+2,461), Wisconsin (+1,081), Ohio (+300), Connecticut (+251), and Idaho (+249), while the largest decreases were in Virginia (-6,548), California (-5,613), Texas (-5,447), Michigan (-2,640), and New Jersey (-2,371).

Eye on the Week Ahead The Federal Open Market Committee meets this week. Based on “hawkish” statements from Fed Chair Jerome Powell and other members, it is likely the Committee will further accelerate the tapering of its asset purchases. It is also possible that the timetable for raising interest rates could be moved up to mid-2022.

The Markets (as of market close December 3, 2021)

Wall Street could not maintain its early momentum, closing the week down. Lower-than-expected employment, new reports of Omicron variant cases, and a hawkish stance from Federal Reserve Chair Jerome Powell led to uncertainty in the market. Each of the benchmark indexes ended the week lower, led by the small caps of the Russell 2000 and the tech-heavy Nasdaq. Treasury yields fell 14 basis points to 1.34%. Crude oil prices continued the longest streak of weekly losses since 2018, falling 2.9%, a skid that has run for six consecutive weeks. The dollar and gold prices changed little. Only utilities and real estate were able to eke out gains among the market sectors.

Stocks rallied last Monday, following the previous week’s Omicron-related selloff. President Biden assured Americans the response to the Omicron variant would not involve shutdowns or lockdowns. The Nasdaq (1.9%) and the S&P 500 (1.3%) led the benchmark indexes, followed by the Dow (0.7%) and the Global Dow (0.1%). The Russell 2000 (-0.2%) ended the day in the red. Sector gains were broad-based, with information technology, consumer discretionary, and utilities outperforming. Ten-year Treasury yields and crude oil prices advanced, while the dollar was mixed.

Wall Street ended the day lower last Tuesday. Chair Jerome Powell admitted that recent inflationary pressures are more than just “transitory,” the emergence of the Omicron variant could pose downside risks to employment and economic recovery, and that the Fed may accelerate the tapering of asset purchases. That was apparently enough to drive stocks lower, with each of the benchmark indexes falling by more than 1.6%. The Russell 2000 dipped 1.92%, followed by the S&P 500 and the Dow, which lost 1.9%. The Nasdaq fell 1.6%. Bond prices spiked, with the yield on 10-year Treasuries dropping over 10.9% to close at 1.44%. Crude oil prices fell to $66.80 per barrel, and the dollar declined.

Last Wednesday, stocks suffered their worst back-to-back sessions since October 2020. The first Omicron case was confirmed in California, while new cases were reported in the United Kingdom, Switzerland, and Brazil. A decline in tech shares pulled the Nasdaq down 1.8%. The Dow fell 1.3%. The S&P 500 dipped 1.2%. The Russell 2000 fell the furthest on the day, losing 2.3%. The Global Dow inched up 0.5%. Crude oil prices fell to $65.35 per barrel. Ten-year Treasury yields declined 62 basis points to 1.43%. The dollar was mixed.

Wall Street rebounded last Thursday, notching its biggest advance since October as dip buyers nabbed some of the hardest-hit shares during the two-day selloff. The Russell 2000 jumped 2.7%. The Dow gained 1.8%. The S&P 500 rose 1.4%. The Nasdaq and the Global Dow climbed 0.8%. Crude oil prices increased to $66.83 per barrel. Treasury yields and the dollar also advanced. Energy, financials, industrials, and real estate led the market sectors.

Stocks closed out a volatile week in the red last Friday. While equities rallied for most of the day, stocks ultimately closed lower on weaker-than-expected jobs data. Among the benchmark indexes, the Russell 2000 (-2.4%) and the Nasdaq (-1.9%) fell the furthest, followed by the S&P 500 (-0.8%), the Global Dow (-0.3%), and the Dow (-0.2%). Ten-year Treasury prices climbed higher, sending yields lower. Crude oil prices and the dollar declined. Consumer staples, utilities, and health care were the only sectors to close in the black.

The national average retail price for regular gasoline was $3.380 per gallon on November 29, $0.015 per gallon less than the prior week’s price but $1.260 higher than a year ago. Gasoline production decreased during the week ended November 26, averaging 9.6 million barrels per day. U.S. crude oil refinery inputs averaged 15.6 million barrels per day during the week ended November 26 — 9,000 barrels per day less than the previous week’s average. Refineries operated at 88.8% of their operable capacity, up marginally from the prior week’s level of 88.6%.

Stock Market Indexes

Market/Index	2020 Close	Prior Week	As of 12/3	Weekly Change	YTD Change
DJIA	30,606.48	34,899.34	34,580.08	-0.91%	12.98%
Nasdaq	12,888.28	15,491.66	15,085.47	-2.62%	17.05%
S&P 500	3,756.07	4,594.62	4,538.43	-1.22%	20.83%
Russell 2000	1,974.86	2,245.94	2,159.31	-3.86%	9.34%
Global Dow	3,487.52	3,962.95	3,944.60	-0.46%	13.11%
Fed. Funds target rate	0.00%-0.25%	0.00%-0.25%	0.00%-0.25%	0 bps	0 bps
10-year Treasuries	0.91%	1.48%	1.34%	-14 bps	43 bps
US Dollar-DXY	89.84	96.09	96.17	0.08%	7.05%
Crude Oil-CL=F	$48.52	$68.15	$66.16	-2.92%	36.36%
Gold-GC=F	$1,893.10	$1,785.50	$1,783.80	-0.10%	-5.77%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• Employment rose by only 210,000 in November, well short of this year’s monthly average of 555,000. However, the unemployment rate fell 0.4 percentage point to 4.2%, and the number of unemployed persons dropped by 542,000 to 6.9 million. Both measures are well below their February-April 2020 highs but remain above their pre-pandemic levels (3.5% and 5.7 million, respectively). Employment has increased by 18.5 million since April 2020 but is down by 3.9 million, or 2.6%, from its pre-pandemic level in February 2020. In November, notable job gains occurred in professional and business services, transportation and warehousing, construction, and manufacturing. Employment in retail trade declined over the month. The labor force participation rate edged up to 61.8% in November — 1.5 percentage points lower than in February 2020. The employment-population ratio increased by 0.4 percentage point to 59.2% last month — lower than the February 2020 figure of 61.1%. The number of persons not in the labor force who currently want a job was 5.9 million in November, little changed over the month but up by 849,000 since February 2020. In November, the number of employed persons who teleworked because of the coronavirus pandemic declined by 0.3 percentage point to 11.3%. In November, 3.6 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic. In November, average hourly earnings increased by $0.08 to $31.03. Over the past 12 months, average hourly earnings have increased by 4.8%. The average work week for all employees increased by 0.1 hour to 34.8 hours in November.
• According to the IHS Markit US Manufacturing Purchasing Managers’ Index™, production rose in November, but at the second-slowest rate since September 2020. Survey respondents noted that the lag in production was attributable to supply delays, labor shortages, and a slowdown in new orders. The rate of cost inflation also increased from October. Although manufacturers still tried to pass on greater costs to clients, data indicated some pushback on higher prices from customers.
• The IHS Markit U.S. Services PMI Business Activity Index registered 58.0 in November, down from 58.7 in October. Although the pace of expansion was stronger than the series average of 54.8, it was subdued in comparison to rates seen throughout 2021. November data indicated a strong rise in new business across the service sector, but supply-chain issues and higher selling prices often acted as deterrents to customers placing orders. The rate of cost inflation was the second-sharpest since October 2009, as higher supplier and fuel costs, coupled with rising wages, drove the increase in input prices.
• For the week ended November 27, there were 222,000 new claims for unemployment insurance, an increase of 28,000 from the previous week’s level, which was revised down by 5,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended November 20 was 1.4%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended November 20 was 1,956,000, a decrease of 107,000 from the prior week’s level, which was revised up by 14,000. This is the lowest level for insured unemployment since March 14, 2020, when it was 1,770,000. For comparison, last year at this time there were 719,000 initial claims for unemployment insurance, and the rate for unemployment claims was 3.8%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates for the week ended November 13 were Puerto Rico (3.7%), the District of Columbia (3.5%), the Virgin Islands (3.3%), Alaska (2.8%), California (2.7%), New Jersey (2.4%), Hawaii (2.3%), Illinois (2.3%), Nevada (2.0%), and Pennsylvania (2.0%). The largest increases in initial claims for the week ended November 20 were in Virginia (+12,703), New Jersey (+2,061), Michigan (+1,926), Oklahoma (+1,490), and Minnesota (+1,465), while the largest decreases were in California (-7,233), Kentucky (-3,910), the District of Columbia (-1,679), Missouri (-1,519), and Massachusetts (-1,410).

Eye on the Week Ahead

The first report on inflationary trends is available this week with the release of the November Consumer Price Index. Prices rose 0.9% in October and have risen 6.2% over the past 12 months. With the holiday season in full swing, consumer prices are not expected to show any significant slowdown.

The Markets (as of market close November 30, 2021)

Stocks ended November generally lower, with only the Nasdaq able to eke out a gain. The Global Dow and the Russell 2000 each lost more than 4.25%. The Dow fell 3.7% and the S&P 500 dropped 0.8%. The Nasdaq gained 0.3%.

Despite some positive economic news, global and domestic markets were sent reeling in November following reports of a new coronavirus strain. The Omicron variant, first discovered in South Africa, prompted several countries, including the United States, to impose travel restrictions. Federal Reserve Chair Jerome Powell indicated that the coronavirus variant could hinder economic recovery efforts and impact the country’s response to surging inflation. Nevertheless, Powell also suggested that the central bank could end its asset purchase program a few months sooner than planned, apparently signaling confidence in the economic recovery, despite concerns over the Omicron variant. Inflation continued to rise, as supply-chain bottlenecks and labor shortages prompted price hikes at both the manufacturing and retail levels.

The Omicron variant also impacted crude oil prices, driving them to the biggest monthly loss since early 2020. Prior to news of the variant, several countries, including the United States, responded to rising oil prices by planning to release of several million barrels of oil from strategic reserves. Bond prices rose in anticipation of rising interest rates, sending yields lower, with 10-year Treasury yields falling 11 basis points to close the month at 1.44%.

There were some positive economic signs in November. Industrial production rose, while sales of new and existing homes increased. More than 500,000 new jobs were added, and weekly claims for unemployment insurance fell to their lowest level since 1969. November saw the dollar climb higher, while gold prices dropped nearly 1.0%. Prices at the pump increased, as the national average retail price for regular gasoline was $3.395 per gallon on November 22, up from the October 25 price of $3.383 per gallon.

Stock Market Indexes

Market/Index	2020 Close	Prior Month	As of November 30	Monthly Change	YTD Change
DJIA	30,606.48	35,819.56	34,483.72	-3.73%	12.67%
Nasdaq	12,888.28	15,498.39	15,537.69	0.25%	20.56%
S&P 500	3,756.07	4,605.38	4,567.00	-0.83%	21.59%
Russell 2000	1,974.86	2,297.19	2,198.91	-4.28%	11.35%
Global Dow	3,487.52	4,091.61	3,913.00	-4.37%	12.20%
Fed. Funds target rate	0.00%-0.25%	0.00%-0.25%	0.00%-0.25%	0 bps	0 bps
10-year Treasuries	0.91%	1.55%	1.44%	-11 bps	53 bps
US Dollar-DXY	89.84	94.12	95.90	1.89%	6.75%
Crude Oil-CL=F	$48.52	$83.27	$66.97	-19.57%	38.03%
Gold-GC=F	$1,893.10	$1,784.20	1,771.10	-0.73%	-6.44%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark the performance of specific investments.

Latest Economic Reports

• Employment: The pace of job gains accelerated in October, as 531,000 new jobs were added. This followed a revised September total of 312,000 new jobs. Through the first 10 months of the year, monthly job growth has averaged 582,000. The unemployment rate declined by 0.2 percentage point to 4.6% in October. The number of unemployed persons, at 7.4 million, continued to trend down (7.7 million in September). Employment has increased by 18.2 million since a recent trough in April 2020 but is down by 4.2 million, or 2.8%, from its pre-pandemic level in February 2020. In October, notable job gains occurred in leisure and hospitality (164,000), food services and drinking places (119,000), professional and business services (100,000), retail trade (35,000), transportation and warehousing (54,000), and manufacturing (60,000). Employment decreased in local government education and state government education (-43,000 and -22,000, respectively). Among the unemployed, the number of permanent job losers declined from 2.3 million in September to 2.1 million in October but is 828,000 higher than in February 2020. The number of persons not in the labor force who currently want a job was 6.0 million, unchanged from the September total. The labor force participation rate, at 61.6%, was unchanged from the September rate and has remained within a narrow range of 61.4% to 61.7% since June 2020. The employment-population ratio was 58.8% in October, up 0.1 percentage point from the previous month. This measure is up from its low of 51.3% in April 2020 but remains below the figure of 61.1% in February 2020. In October, 11.6% of employed persons teleworked because of the pandemic, a decrease of 1.6 percentage point from the prior month. In October, 3.8 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic; this is down from 5.0 million in September. Average hourly earnings rose $0.11 to $30.96 in October. Earnings have increased 4.9% since October 2020. The average work week in October was 34.7 hours, a decrease of 0.1 hour from September.
• The total number of claims for unemployment insurance fell in November. According to the latest weekly totals, as of November 13 there were 2,049,000 workers receiving unemployment insurance benefits, down from the October 16 total of 2,243,000. The unemployment rate for the week ended November 13 was 1.5%, down 0.2 percentage point from the October 16 rate of 1.7%. During the week ended November 6, Extended Benefits were available in four states/territories: Alaska, Connecticut, New Jersey, and New Mexico; 40 states reported 334,750 continued weekly claims for Pandemic Unemployment Assistance benefits (270,013 on October 9), and 41 states reported 151,556 continued claims for Pandemic Emergency Unemployment Compensation benefits (244,379 on October 9).
• FOMC/interest rates: The Federal Open Market Committee met in November. While the Committee left the federal funds target range rate at its current 0.00%-0.25%, it decided to begin tapering its asset purchases, reducing Treasury and mortgage-backed securities buybacks by $10 billion and $5 billion per month, respectively.
• GDP/budget: According to the second estimate from the Bureau of Economic Analysis, the economy accelerated at an annual rate of 2.1% in the third quarter after advancing 6.7% in the second quarter. Consumer spending, as measured by personal consumption expenditures, increased 1.7% in the third quarter after rising 12.0% in the prior quarter. The personal consumption price index (prices for consumer goods and services) rose 5.3% in the third quarter after climbing 6.5% in the second quarter. Excluding food and energy, the price index increased 4.5% in the third quarter compared with an increase of 6.1% in the second quarter. In the third quarter, fixed investment dipped 1.1% following a 3.3% increase in the second quarter, and residential fixed investment fell 8.3% after decreasing 11.7% in the second quarter. Exports slid 3.0% in the third quarter after increasing 7.6% in the second quarter. Imports (which are a negative in the calculation of GDP) increased 5.8% in the third quarter (7.1% in the second quarter). Overall, third-quarter GDP reflected the continued economic impact of the COVID-19 pandemic. A resurgence of COVID-19 cases resulted in new restrictions and delays in the reopening of establishments in some parts of the country. Also, government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households decreased.
• The Treasury budget deficit for October came in at $165.1 billion, 42.0% lower than the deficit in the same month last year. Compared to October 2020, government receipts rose 19.0% to $283.9 billion, while government expenditures decreased 14.0% to $449.0 billion. Individual income tax receipts rose 32.0% in October, while corporate tax receipts rose 72.0%. Medicare expenditures declined by 44.0% compared to October 2020, national defense expenditures dipped by 14.0%, and spending on agriculture dropped 62.0%.
• Inflation/consumer spending: Personal income increased 0.5% in October after falling 1.0% in September. Disposable (after-tax) personal income rose 0.3% in October after decreasing 1.3% the previous month. The increase in personal income in October primarily reflected increases in wages (0.8%), income from assets (0.9%), and dividend income (1.2%). Consumer spending rose 1.3% in October following a 0.6% increase in September. Consumer prices continued to rise in October, increasing 0.6%, after climbing 0.4% in September. Excluding food and energy, consumer prices advanced 0.4% in October. Prices have risen 5.0% since October 2020, and 4.1% excluding food and energy.
• Prices at the consumer level continued to advance in October, increasing 0.9% following a 0.4% rise in September. Prices for consumer goods and services have increased 6.2% since October 2020. Excluding food and energy, consumer prices rose 0.6% in October (0.2% in September) and 4.6% since October 2020. Prices for food rose 0.9% in October, the same increase as in September. Energy prices rose 4.8% in October (1.3% in September), while gasoline prices jumped 6.1% (1.2% in September) and fuel oil prices climbed 12.3% (3.9% in September). Prices for new vehicles and used cars and trucks rose 1.4% and 2.5%, respectively, in October.

• Producer prices continued to climb in October, increasing 0.6% after rising 0.5% in September. Producer prices increased 8.6% for the 12 months ended in October. Prices for services in October rose 0.2%, unchanged from the previous month, while prices for goods moved up 1.2% (1.3% in September). Producer prices less foods, energy, and trade services advanced 0.4% in October (0.1% in September) and have risen 6.2% since October 2020. Energy prices jumped 4.8% in October, with one-third of that advance attributable to a 6.7% jump in gasoline prices. The October increase in producer prices for services was driven by a 0.4% climb in trade services (trade services measure the change in margins received by wholesalers and retailers).

• Housing: Existing home sales rose 0.8% in October after advancing 7.0% in September. Nevertheless, existing home sales have dropped 5.8% from a year ago. The median existing-home price was $353,900 in October ($352,800 in September), up 13.1% from October 2020 ($313,000). Total housing inventory at the end of October dropped 0.8% from September’s supply and is down 12.0% from one year ago. In October, unsold inventory sat at a 2.4-month supply at the present sales pace (2.5-month supply in September). Sales of existing single-family homes also increased in October, climbing 1.3% after climbing 7.7% in September. Year over year, sales of existing single-family homes are down 5.8%. The median existing single-family home price was $360,800 in October, down from $359,700 in September.
• New single-family home sales increased in October, advancing 0.4% after increasing 7.0% in September (revised). Despite the recent monthly increase, sales of new single-family homes have decreased 23.1% from October 2020. The median sales price of new single-family houses sold in October was $407,700 ($404,700 in September). The October average sales price was $477,800 ($457,200 in September). The inventory of new single-family homes for sale in October represents a supply of 6.3 months at the current sales pace, up from the September estimate of 6.1 months.
• Manufacturing: Industrial production rose 1.6% in October after falling 1.3% in September. About half of the gain in October reflected a recovery from the effects of Hurricane Ida. Manufacturing output increased 1.2% in October following a 0.7% decreased the previous month. The output of utilities rose 1.2% (3.7% in September), and mining output stepped up 4.1% following a 2.3% dip in September. Overall, total industrial production in October was 5.1% above its year-earlier level and at its highest reading since December 2019.
• New orders for durable goods decreased $1.2 billion, or 0.5%, in October after falling 0.4% in September. Transportation equipment, down three of the last four months, drove the October decline, falling $2.0 billion, or 2.6%. Excluding transportation, new orders rose 0.5% in October. New orders for aircraft and parts were particularly weak, with defense aircraft and parts falling 21.8%, while nondefense aircraft dipped 14.5%. Otherwise, shipments (1.5%), unfilled orders (0.2%), and inventories (0.6%) advanced in October. New orders for nondefense capital goods decreased 1.2% in October after falling 4.4% the previous month.
• Imports and exports: October import prices rose 1.2% following a 0.4% advance in September. The October increase was the largest monthly advance since a 1.3% rise in May. Import prices rose 10.7% over the 12 months ended in October (9.2% for the 12 months ended in September), the largest year-over-year increase since June 2021. Import fuel prices jumped 8.6% in October after advancing 3.9% in September. Import fuel prices rose 86.7% over the past year. Both the 86.7% advance in petroleum prices and a 134.0% increase in natural gas prices factored into the 12-month rise in import fuel prices in October. Export prices advanced 1.5% in October after edging up 0.1% in September. The October increase was the largest one-month increase since a 2.3% rise in May 2021. For the year ended in October, export prices rose 18.0%, the largest 12-month increase since the series was first published in September 1983.
• The international trade in goods advance report showed the October deficit decreased by $14.1 billion, or 14.6%, to $89.2 billion. Exports increased $15.3 billion, or 10.7%, while imports rose $1.1 billion, or 0.5%. For the 12 months ended in October, exports have risen 25.5%, while imports have increased 16.3%.
• The latest information on international trade in goods and services, out November 4, was for September and showed that the goods and services trade deficit increased by 11.2% to $80.9 billion. September exports dipped 3.0%, while imports advanced 0.6%. Year to date, the goods and services deficit increased $158.7 billion, or 33.1%, from the same period in 2020. Exports increased $274.1 billion, or 17.4%. Imports increased $432.8 billion, or 21.1%.
• International markets:Fears that the economic recovery might be slowed by the spread of the Omicron coronavirus variant impacted global markets. Several countries imposed travel bans and other restrictions in response to the potentially more contagious variant. A new government took control in Germany, with Social Democrat leader Olaf Scholz succeeding Angela Merkel as chancellor. Expectations for higher U.S. interest rates pulled the Japanese yen to a three-year low versus the dollar. Relations between the United States and China remained tense over the status of Taiwan and trade issues. The Chinese real estate sector remained troubled, as high-profile developers tried to avert default on obligations to creditors. In the markets for November, the STOXX Europe 600 Index dropped 3.0%; the United Kingdom’s FTSE fell 2.8%; Japan’s Nikkei 225 Index dipped 5.8%; and China’s Shanghai Composite Index rose 1.7%.
• Consumer confidence: According to the latest report from The Conference Board, consumer confidence decreased in November for the fourth time in the last five months. The Consumer Confidence Index® stands at 109.5 in November, down from 111.6 in October. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, fell to 142.5 in November from 145.5 the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, registered 87.6 in November, down from 89.0 in October.

Eye on the Month Ahead

December will not only close 2021 but will likely be a precursor to what lies ahead in 2022. The Federal Open Market Committee meets mid-month and is expected to address rising inflationary pressures. The FOMC could accelerate the reduction of bond purchases and possibly consider raising interest rates sometime in 2022. Job growth accelerated in September and October, adding nearly 850,000 new jobs. November’s figure is projected to be in the range of 350,000 new jobs added. Industrial production is expected to expand in November despite being hampered by supply bottlenecks and labor shortages.