Two economic notes on the shutdown
The government shutdown is the economic equivalent of sustaining -800,000, or -0.5%, layoffs. The last time we saw that was in the Panic of 2008.
So needless to say, it is very surprising that last week saw fewer official layoffs than at any time since November 1969. On a population-weighted basis, this is an all-time low. This entire behavior of first time jobless claims during this expansion speaks to employers only having hired new workers when there is compelling need. [Note that government workers are merely being “furloughed,” not laid off, so they are not showing up in these statistics.]
While this is undoubtedly good news, one of the two private sources of weekly consumer spending I follow reported only a +0.7% YoY increase in sales last week. Outside of the 2015-16 “shallow industrial recession,” this is the lowest for either of these series during the entire expansion.
I have a more detailed post about consumer spending pending at Seeking Alpha. Once it goes up, I’ll give you a link to hit here.