Jobless claims: steady as it goes

– by a New Deal Democrat

[ Special programming note: yesterday’s Fed action, and more important the statements made afterward, merit special attention. I will put up a special post on that later today.]

Initial jobless claims remained at a recent low, down -1,000 from a week ago to 217,000. The 4-week average fell -500 to 218,750. Continuing claims, which lagged slightly, rose by 47,500 to 7 -monthly high of 1,485,000:

The recent ups and downs in jobless claims appear larger in this chart than in the past two years, but that’s all because the big numbers from 2020 and earlier in 2021 have disappeared from this 1-year timeline frame. At any point in the last half century, jobless claims on the order of 300,000/week (as they were 1 year ago) would have been considered very good indeed.

So this remains good news. Very few people are laid off.

There are a few takeaways for tomorrow’s jobs report, so let’s update them briefly.

First, jobless claims lead the unemployment rate by several months. Here’s the 4-week average of jobless claims (red) versus the jobless rate (blue) over the past two years:

I expect that the 3.5% unemployment rate recorded in July and September is likely to be the lowest for this expansion, although there is no reason to expect a large increase so far.

Second, consumption leads to employment. Here’s a chart updated using last month’s data for real retail sales (blue, /2 for scale) and monthly % of jobs (red):

The average monthly job gain on a year-over-year basis has slowed this year. With the exception of the large positive deviation in July (+537,000 jobs), since March they have declined from +398,000 jobs to +263,000 in September. While the number for any given month can be volatile, the trend in consumption strongly suggests that this downward trend in jobs will continue into tomorrow’s October report.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *