Jobless claims make another record low
Jobless claims make another record low
One reason not to get excited about the last week’s stock market swoon is that it isn’t being confirmed by any other short term leading indicators. Most significantly, jobless claims.
The 4 week moving average of new jobless claims has fallen below 225,000. This is yet another 40 year record low. In fact, with the exception of six weeks in the early 1970s, it’s a new 50 year low.
And adjusted for population growth, it is a new all-time low.
As a practical matter, virtually nobody is getting laid off. This is not an economy that is about to roll over.
new deal dem
nice to know. but meanwhile a lot of people have lost a lot of money on the stock market. not all of them rich people.
4-week Average jobless claims have been at a 43.6 year low since June 11, 2016….for the last 20 months (80 weeks) already.
They were at 27 year low 8 months prior to the 2001 Dot-com bust too.
They were at 15 year low 6 months prior to the 1990 recession too.
The fact that they are at a multi decade low means absolutely nothing and has zero bearing on the underlying strength of the economy .. if anything multi decade lows are an indicator that the economy is ready to falter because it’s underlying fundamentals can’t support the employment levels.
EPOP is at 60.1% (Jan 2018) the same level it was last at in Feb 1985 33 years ago. It was at 62.7% in Oct 2007 the month before the economy hit the skids. The last high was in Dec 2006 at 63.4%.
The Jobless claims drop as EPOP increases (duh), until the economy goes south again… and there’s no telling when that will occur based on either metric or that either metric is an indicator of near future.
You seem to be wearing rose colored glasses per your “This is not an economy that is about to roll over. ” prognostication…. not based on anything objective, but pure speculation.
NDD, the personal savings rate is now below where it was in November 2007 just as the recession hit. This is not a good sign considering economic fundamentals, since it indicates spending beyond means.
This level of low savings rates occurs when consumers are either over-confident in their future earnings (spending “like it’s 1999”?) or their incomes aren’t keeping up.
Considering real wage growth the latter appears more to be the case.
Real Disposable income has been growing at an anemic, near nothing rate since May 2017, being only 0.41% over 7 months or at a 0.7% per year annual rate.
From Oct 2013 to Nov 2015 it grew 8.5% over 25 months or at an annual rate of 4.1% per year. I don’t think the current growth in real disposable income at a rate less than 20% of that indicates much steam left in economy.
The combination of lowest savings rates and ultra-low growth in real disposable income means consumers are living on the hairy edge of making it. This sure as shit doesn’t mean the economy is partying like it’s 1999 but rather that it’s on the verge of petering out.
With such a low real disposable income growth and ultra-low savings rates then demand for goods and services is also low and not growing much, which means domestic employers can’t be growing output much.. either that or it’s stacking up in inventory somewhere (on producer’s receiving docks, or wholesalers or in the back rooms at retailers).
These are the fundamentals of the economy.
Add to that the huge drop in the value of the dollar which means import prices increasing but still a lot lower than domestic goods, and so domestic producers have to drop prices to maintain any growth in output at all, which just reduces their margins — one of the drivers of the market’s correction now underway. If margins are dropping or more significantly, not growing as much as they were, then it’s an indicator to major investors that growth is stalling or stalled out.
All in all, the average weekly unemployment claims means zilch.
Big ticket auto-sales have stalled out since 2015 and there’s no there’s no indication that consumers will be spending at a greater rate on one of the economy’s major consumer spending items, which takes it out of play as a growth driver.
Trump just jammed on the brakes for Korean washing machines with a huge tariff too, so as soon as that inventory dries up it will simply drive domestic producers to increase their prices (reduced price competition and increased profitability) and reduce overall demand for those kinds of items also.