Jobless claims: a very positive reversal
This week’s new jobless claims report not only reversed last week’s increase but declined below 800,000 for the first time on an *un*revised basis. I say that because revisions from two weeks ago now have that week as the lowest since the pandemic struck. [NOTE: California has restarted reporting its claims, and has also reported for the past two weeks, and is the likely cause of the big revisions – generally downward, or positive.]
On a non-seasonally adjusted basis, new jobless claims declined by 73,125 to 756,617. This would be a new low, except two weeks ago was revised down to 731,249. After seasonal adjustment (which is far less important than usual at this time), claims declined by 55,000 to 787,000. This would be a new low as well, except two weeks ago was revised down to 767,000. The 4-week moving average also decreased by 21,500 to 811,250, a new pandemic low:
Here is a close-up of the last three months since the end of July highlighting the overall slow progress in initial claims since then:
Continuing claims (which lag initial claims typically by a few weeks to several months) on a non-adjusted basis declined by 2,238,268 to 7,992,238. With seasonal adjustment they declined by 2,221,000 to 8,373,000. Both of these are new pandemic lows:
Continuing claims are now about 2/3’s below their worst level from the beginning of May, but are still about 1.5 to 2 million higher than their worst levels during the Great Recession.
Last week I noted my concern for the big weekly increase in claims, while cautioning that it was “only one week’s data.” This week’s big reversal explains that caution.
Overall the situation with layoffs has continued to improve at a very slow pace. This is of a piece with the same slow continued improvement in most of the “weekly indicators” I update each Saturday. At the same time, we are still at the mercy of the pandemic, and there are new indications that it is about to worsen again with the onset of cold weather and people retreating indoors.
Layoffs that started in early and mid-March hit six months over the past month. Which leads to the “how many of those continuing claim drops are people who did not get their benefits extended?” question.
I would fully expect to see some drop off from people being dropped from claims. I’m hesitant to assume that can be viewed as encouraging in the face of would-have-been-a-record-three-years-ago new claims.
I think it just shows we are at the leveling off of where our total employment figures are going to be going forward. That is, the economy has found it’s new “balance” of need for workers vs demand vs source of goods and services.
That is, “we don’t know where this is going but we are functioning and comfortable with this number of workers”.
leveling off of where our total employment figures are going to
”
believe it! we are approaching a new asymptote. still, we have to keep in mind that the stock market reflects what the economy will be doing 6 months from now.
sell the strength; buy the dip
keep more cash for the daunting trip
!