Data Points
- The number of air travel passengers was 267,000 on May 24, up from a low of 88,000 on April 14.
- The “one country, two systems” principle has guided relations between Hong Kong and mainland China since 1997
- Personal income rose by 10.5% in April from March
Top Three Market Headlines
U.S. Economy Begins to Stir: A number of “real time” indicators tracked by Bloomberg Economics have modestly improved in recent weeks, suggesting the U.S. economy is beginning to recover as COVID-19 containment restrictions begin to ease. For instance, air travel passengers reached a daily total of 267,000 in the U.S. on May 24 from a low of 88,000 on April 14, according to the Transportation Security Administration, while hotel occupancy rates increased from 21% last month to 32% in the week ended May 16, according to a survey conducted by hospitality data services company STR. Meanwhile, though still well below pre-crisis levels, restaurant bookings have begun to pick up, according to OpenTable.
U.S. - China Tensions Reignite: Tensions between the U.S. and China flared up last week after China passed a law aimed at advancing national security in Hong Kong, a move that critics fear will weaken the territory’s autonomy under the “one country, two systems” principle that has applied since 1997. In response, U.S. Secretary of State Mike Pompeo stated the U.S. no longer sees Hong Kong as autonomous, and President Trump on Friday announced the U.S. would begin eliminating certain special trading privileges for Hong Kong that have exempted it from the same U.S. tariffs and restrictions applied to mainland China. In addition, prior to the law’s passage in China, the U.S. Senate passed legislation that could tighten restrictions on Chinese companies listing shares on U.S. stock exchanges.
Personal Income Surges While Spending Plunges: Despite declining wages and salaries resulting from job losses, overall personal income in the U.S. rose by 10.5% in April from the prior month, thanks to federal rescue programs, the Bureau of Economic Analysis (BEA) reported last week. The one-time $1,200 stimulus payments that were part of the CARES Act reflected the bulk of the increase, while unemployment insurance payments also boosted the total. Meanwhile, the BEA also reported that consumer spending fell a record 13.6% in April as most Americans sheltered in place. Among hard goods, the largest decrease was seen in food and beverages, while among services the biggest declines were registered in healthcare spending, food services, and accommodations.