Inflation, Jobless Claims, and Global Vaccine Distribution

Jun 11, 2021 | Nick Scholte


As the title suggests, this week's update will consist of quick-hit comments on these topics.

To my clients:

It was a mixed week for North American stock markets with the Canadian TSX finishing up 0.6%; the Dow Jones Index down 0.8%; and the S&P 500 up 0.4%.

Shortish update this week, with quick comments on inflation, weekly jobless claims, and vaccine distribution by the G7.

Inflation continues to spike with the Thursday release of the May Consumer Price Index (CPI) data showing a 5% y/y increase in overall prices and a 3.8% pickup after removing food and energy prices. Again, while these levels are in comparison to the depressed levels of a year ago, it is undeniable that inflation is nonetheless surging. However, nothing in the report looks significant enough to shift the Federal Reserve’s view that inflation is transitory—a conclusion that was likely reinforced by May’s 2.2% y/y decline in average weekly earnings. With higher labor income a likely prerequisite for sustained upward inflation (i.e. not the “transitory” variety), I and RBC believe the Federal Reserve will remain highly accommodative with near-zero interest rates persisting well into 2022 at the least.

Weekly jobless claims continue to trend lower with this week’s reading coming in at 376,000 claims. As often mentioned, the trend in claims is perhaps RBC’s preferred method of forecasting recession, and there is absolutely nothing to see here. The trend is inexorably and persistently for the better.

Lastly, the U.S. announced it would buy 500 million doses of Pfizer vaccine for distribution to developing countries throughout the world, and the broader G7 pledged to follow suit by collectively donating 1 billion doses at a cost of $5 to $7 billion. Further, it is estimated that fully vaccinating the rest of the world will cost 10 times more at around $50 to $70 billion. Given the magnitudes of fiscal stimulus already pumped into the global economy (literally 10’s of trillions of dollars), developed nations spending less than 1% of these sums to fully re-open the global economy seems like a no-brainer from an economic – let alone humanitarian – perspective.

That’s it for this week. All the best, and remain safe,


Nick Scholte, CIM, FCSI

Vice-President & Portfolio Manager

Scholte Wealth Management
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