- by New Deal democrat
In the last few weeks, there has been speculation that jobless claims may have been affected by the jihad against immigrants, the theory being enough were being deported or else were simply afraid to report to work that the number of jobless claims was held down. But I suspected it might at least mainly be due to unresolved seasonality issues involving educational layoffs and rehires.
To refresh, in the past several years even the seasonally adjusted data appeared to show a bottom in claims after the Holiday season, rising through spring to a wave peaking during the summer, and then declining back through the end of the year. Because of issues involving the school calendar this year, the June and July employment reports showed sharp, adjusted, swings in education employment. I hypothesized the same thing might be going on with jobless claims.
This week’s report added to evidence that my hypothesis has been correct. Initial claims rose 8,000 to 238,000, a ten week high. The four week average rose 2,500 to 231,000, a seven week high. With the typical one week delay, continuing claims declined -4,000 to 1.940 million, near the bottom of this summer’s range, but above any other readings since November 2021:
As usual, the YoY% changes are more important for forecasting purposes. And as of this week, all three were higher. Initial claims were up by 3.9% YoY, the four week average up 0.4%, and continuing claims up 4.9%:
Thus, after over a month as a “positive” indicator, jobless claims now revert to “neutral,” suggesting a weak but still expanding economy in the next several months.
Tomorrow we will get the August jobs report. The comparison of the monthly YoY% changes in jobless claims vs. the unemployment rate (which was either 4.1% or 4.2% in the July through September period last year), suggests that it will remain in that range, or possibly tick higher to 4.3%:
The important takeaway today is that initial claims had been one of the two main positive indicators, along with the stock market, suggesting clear sailing ahead. While it is not forecasting recession, it is no longer suggesting strength either.
