Tabulations of state level reports indicates 228,000 initial claims, 1.938 million continuing claims last week

 

 - by New Deal democrat

Among the economic data that is not being reported due to the federal government shutdown are initial and continuing jobless claims. Which, as I pointed out last week, is interesting because they were reported during the lengthy 2013 shutdown and for at least part of the 2018-19 shutdown.

But both sets of claims are simply tabulations of all the claims made at the State levels (plus DC, Puerto Rico, and the Virgin Islands), to which a seasonal adjustment is made. This means that we can reconstruct the YoY% changes in the data from the various jurisdictions’ reports; as well as provide a reasonable estimate of what the seasonably adjusted numbers would be.

Tabulating the 53 jurisdications’ reports, for the week ending October 4, unadjusted initial claims totaled 207,794 vs. 236,179 in 2024, which is -12.0% less. 

Last year this week the seasonal multiplier was *1.0966:

Applying it gives us an estimated seasonally adjusted number of 228,000, a 4,000 increase from one week ago. 

Adding it to the three previous weeks of data we arrive at a four week moving average of 225,500, which is 6,750 less than one year ago, or -3.1% lower. 

There is an important caveat about last year in that these were affected by hurricane related layoffs, particularly in Florida and North Carolina. 

Next, continuing claims with the typical one week delay, i.e., for the week ending September 27, totaled 1,683,327 vs. 1,614,324 last year, or 4.3% higher.

The seasonal adjustment for the applicable week last year was *1.510:

Applying it gives us an estimate of 1.938 million continuing claims, or +19,000 higher than one week ago.

Absent hurricane distortions, this continues the general neutral trend of initial and continuing claims, forecasting a weak but not contracting economy in the next several months. I will continue to estimate this data for the duration of the shutdown.

Weekly Indicators for October 6 - 10 at Seeking Alpha

 

 - by New Deal democrat

My “Weekly Indicators” post is up at Seeking Alpha.

More roiling of the waters in commodities, in between signs of economic weakness and another re-ignition of the China trade wars. Meanwhile the Treasury Department, for no apparent valid reason, but only out of spite, has taken its “Daily Treasury Statement,” which enables us to measure tax withholding and tariff revenues, offline. And not just new updates, but all of the already published data.

As usual, clicking through and reading will bring you up to the virtual moment as to the state of the data, and reward me a little bit for obtaining and organizing it for you.

The “Big Picture” nowcast and forecast

 

 - by New Deal democrat

We are well into our data blackout, as no federal economic data whatsoever was released this week. Even sites that functioned in previous shutdowns, such as the Treasury Department’s “Daily Treasury Statement,” have been taken offline. This is simply not the way a functioning country works.

So let me conclude this week by offering the proverbial “30,000 foot view” of the economy, together with some links and graphs to relevant privately sourced data that is partially filling in some of the gaps.

The Big Picture nowcast and forecast are dominated by two different events.

The nowcast is that the economy is currently sharply bifurcated into an AI-related part and the rest. The AI-related part of the economy is booming. Corporate profits in the 3rd quarter are set to make another record, powered by the “magnificent 7” tech companies (Note: many of the below graphs are sourced from Carl Quintanilla’s excellent Bluesky feed. Several are also due to the extremely helpful “Alternative Data” graph pack from Apollo Investments, see https://www.apolloacademy.com/wp-content/uploads/2025/10/AlternativeData100525.pdf ):

Data centers are still being built at a fast pace, creating more demand for energy, and also (as I wrote yesterday) creating a “wealth effect” that is fueling consumer spending by the upper echelons of owners of stocks, as shown in this graph by B of A:

But the rest of the economy probably began a recession several months ago, with real personal income and jobs stagnant or even having begun to decline. The Bank of America published its proprietary employment indicators for September several days ago, and here are the important graphs:

Employment gains hovering just above 0 and the unemployment rate rising is a classic signal at the beginning of recessions.

There are also reports that bankruptcies have been increasing:

And consumers are falling behind on important installment loans such as for motor vehicles:

At least some of this, by the way, may be due to the resumption of the full requirements of repayment of crippling student loans, which may not be discharged in bankruptcy.

So why aren’t I on “Recession Watch” already? Because the size of the AI Boom is so big that for the moment at least it is more than counterbalancing the malaise in the rest of the economy.

The Big PIcture forecast, generally for the rest of the T—-p Administration, is gloomy. That’s because the entire US fiscal and economic policy is being run as a gargantuan mafia-style “bust-out,” or what Darin Acemoglu and James Robinson called “extractive economies” in their book “Why Nations Fail.” In extractive economies, an elite group of cronies around the ruler uses political and economic power to enrich themselves. Part of this paradigm is the mafia-style shakedown: “got a nice company/product/industry there; be a shame if something happened to it.” 

T—-p’s entire economic “policy” has been built around this. Want to export to the US? Wet my beak. Want your merger to go through? Wet my beak. Want your State’s biggest industry (agriculture, vehicle production, tourism) to stay intact? Wet my beak:

We’re even seeing the government directly invest in the stocks of companies; viz., Intel. Even the $20 Billion bailout of Argentina, unsurprisingly, looks like it was mainly to rescue the investment portfolios of several Billionaire T—-p cronies.

And of course the “Big Beautiful Budget Bill” amounts to a massive upward transfer of wealth that will so explode deficits in the coming decade that it will leave little if any room for stimulative policies to counteract the next downturn.

Extractive economies grow anemically or even contract, because it is simply not worth it to innovate when the ruler and his clique will muscle in.

Exactly how the US economy will degenerate during the next 3 years (or whatever the duration of T—-p’s time in office) is impossible to know or predict. But it is a virtual certainty that it will degenerate. And in the meantime we are flying blind, because the flow of reliable statistical data has also been mainly shut off.

The advance-decline line and the (maybe) AI-fueled consumer spending bubble

 

 - by New Deal democrat

I rarely comment on the financial markets directly, since my focus in on the economy and how it impacts ordinary working and middle class Americans, especially in the near future. But in some cases, the financial markets themselves play an important role in that picture. And this is one of those times.

Specifically, in terms of what is called the “wealth effect.” It means that when people’s wealth increases, even if it only on paper, they tend to spend some of that gain. According to Ned Davis research, it averages about 40% of the amount of the gain.

Well, since the post-“Liberation Day” April bottom, the stock market as measured by the S&P 500 has increased almost 35%. Meaning, for example, that a household that held $100,000 in that index in April has seen it grow by $35,000. A wealthier household that held $1 million, has gained $350,000. And so on.

As I have pointed out a number of times in the past several months, it is strong consumer spending that is keeping the economy going forward, despite recessionary signs elsewhere.

But how robust, or fragile, are those gains? One of the best historical measures I have found to be the “advance-decline line.” This subtracts the number of stocks which have lost value on any given day from the number which have gained. For example, if there are 1000 stocks in a bucket, and 550 have advanced and 450 declined, then the advance-decline line increases by 100. If the advance-decline line shows that the broad mass of stocks are participating in an advance, that is a good sign, because it suggests that many sectors are benefitting. But if it is narrow, or worse even declining, while the market index increases, that means that only a few stocks in a narrow sector or group of sectors are participating, suggesting trouble for the markets, and the economy, ahead.

There are two very good examples of the advance-decline line giving such a signal.

First, here is the late 2006-2007 time frame just before the onset of the Great Recession. The top graphic is the NYSE, the second is the advance-decline line for the S&P, and the bottom is for the S&P 500:

Note that even as stocks broke out to new highs at mid year, and again to their early autumn peak, the advance-decline line retreated in spring, and was even lower by autumn. This told us that the economy was resting on a narrow slice of sectors.

An even more breathtaking example is that of the Dotcom bubble of 1999-2000:

Here the advance-decline lines for the NYSE and S&P 500 declined sharply throughout the latter part of 1999 into 2000, even as the index raced ahead by almost 50%! This was a telltale sign, indicating that outside of the bubble economic prospects were not good at all.

So how has the advance-decline line been behaving this year? Here’s the answer for the S&P 500:

As indicated above, since the bottom in early April, stocks have increased by almost 35%. The advance-decline line participated fully in the springtime advance to mid-year.

But since early July, while the S&P 500 has increased almost another 10%, although it has not declined the advance-decline line has only increased by about 1%.

This is “yellow flag” territory. Slightly more stocks than not have been participating in the advance. But compared with the amount of the advance, it is quite narrow.

I would need the advance-decline line to actually turn down before it would signal a “red flag” for me.

But here is the important thing to keep in mind. If the AI-focused stock market is in a bubble - which is almost impossible to know while you are experiencing it - then whenever it pops, stock valuations are likely to plunge all the way back to their pre-bubble levels (and maybe overcompensate to the downside).

Which in turn brings us to the opposite of the “wealth effect.” Psychologists have estimated that this “negative” wealth effect is about twice as potent as the “positive” one. In layperson’s terms, people *really* hate to lose money. When that happens, they pull in their horns much more dramatically than when they spend some of their paper gains.

The conclusion here is that it doesn’t look like the turn is imminent. But if and when the turn comes, if other economic circumstances are close to what they are now, the contraction could be rather sudden and intense.

Consumer spending has continued to increase

 

 - by New Deal democrat

I concluded my post yesterday with the conclusion that “while housing and trucking are plainly recessionary, the broader manufacturing orders outlook and consumer purchases of vehicles are not.”  Today I want to expand on that by taking a broader look at the main coincident measures of expansion vs. recession, and focus on some up-to-date measures of consumer spending.

Let’s start with two coincident measures that either have peaked or look like they are peaking in the present: real personal income excluding government transfers (blue) and jobs (red), both normed to 100 as of April:

Real income peaked in April, and nonfarm payrolls as of the last official report jobs have only increased by less than 0.1% since then. If one believes ADP and several other private measures for September, there were either slight increases or an outright decline for that month, meaning the current measure is somewhere between unchanged and up 0.1% in the 5 months since April.

Further, looking at my favorite measure of real aggregate payrolls, nonsupervisory payrolls only increased 0.1% through July and remain lower than March, while total private payrolls actually declined -0.2% since April.:

In short, both real income and jobs look like they are on the cusp of or have actually started to decline.

But the story is different when we look at the other coincident measures of real sales (blue), production (red), and real spending (gold):

All three of these continued to increase after April, and two are at new highs. While industrial production is below June’s level, its manufacturing component (not shown) made a new post-pandemic high in the most recent report, for August.

Since as I have pointed out previously, real spending on services has historically continued to rise, albeit at a more subdued rate, right through all but the worst recessions, for forecasting purposes I rely on real personal spending on goods (gold) and real retail sales (blue):

Real retail sales made a new 2.5 year high in August, while real spending on goods made a new all-time high. Which supports the point that manufacturing production and sales/purchases have been continuing to increase.

And we do have information suggesting that at very least, there was no decline in September.

First of all, the Chicago Fed publishes a twice-monthly “Advance Retail Trade Summary,” which uses weekly private data to forecast monthly nominal and real retail sales ex-motor vehicles. Here is its graph of nominal sales through September:

The Chicago Fed estimates that retail sales rose 0.3% nominally in September, and were unchanged after accounting for inflation. 

Officially the US government has only reported vehicle sales through August, but the private source Omida (via Bill McBride) reported a 2% increase in the volume of sales in September vs. August:

Motor vehicle prices have been almost exactly unchanged for several years, so it is likely that this is a real $ increase in sales as well.

Finally, we also have the weekly Redbook same store sales update in YoY terms:

This continuus the strong nominal increases in excess of 5% and even over 6% that we have seen for the past several months.

In short, while several important coincident measures of the economy may have peaked, in an economy that is 70% consumer spending, until I see evidence that it has stalled as well it is hard to conclude that a recession is imminent.

Auto and truck purchases give conflicting signals on expansion vs. recession

 

 - by New Deal democrat

The typical post-jobs report lull in the data is amplified this month (of course) by the fact that there was no jobs report this month! If there is a tiny silver lining beginning to appear, it is that the Administration is making noises about reinstating the health care subsidies that has been the key “ask” by Congressional Democrats. We’ll see.

One important data point that came out last week that I didn’t report on was vehicle sales. To recap, after housing, vehicle sales are typically the next sector to roll over before a recession begins. And within those sales, heavy truck sales typically roll over first and most decisively vs. car and light truck sales, which fade later and are much noisier.

The update last week, for August, indicated a very sharp -5.2% decline in heavy truck sales for the month, bringing the total decline from their April 2023 peak to -27.4%. Here’s what the entire historical trend looks like:

Typically any sustained decline of -10% from peak has been enough to signal a near term recession is more likely than not, so this is a very serious number.

When on a YoY% basis, both housing under construction (blue in the graph below) as well as heavy truck sales (red) are off more than -10%, with no false positives and only one (non-pandemic) false negative, in 2000 (note graph adds 10% to both values so that is shows at the 0 line):

The above recession indicator has been triggered for the last two months.

But no recession indicator is perfect, and two other components are missing from this picture.

First, as per above, car and light weight truck sales have also always rolled over before the onset of recessions, although they are much noisier. Thus the below pre-pandemic YoY graph shows monthly sales in light blue, and the quarterly average in dark blue:

There are plenty of false positives here, but no false negatives. Which is important when we look at the post-pandemic graph:

The latest three month average of car and light truck sales is higher by 4% YoY. This is simply not recessionary.

Also, the “third leg of the stool” in leading durable goods is the wider manufacturers’ new orders component, which I reported on last week. To reiterate, here is the pre-pandemic historical record:

While these did roll over well in advance of the 2001 recession, they were still weakly positive going in to the 2008 recession.

Here is the post-pandemic look:

As per my report last week, these are up roughly 5% YoY through August.

In short, while housing and trucking are plainly recessionary, the broader manufacturing orders outlook and consumer purchases of vehicles are not.

Using tabulated State data, estimated initial and continuing claims last week continued in neutral range

 

 - by New Deal democrat

As we all know, initial and continuing jobless claims were not reported last Thursday. Which, by the way, is interesting, because they were reported during the lengthy 2013 shutdown and for at least part of the 2018-19 shutdown.

A large part of the reason they likely continued to be reported is that all the Federal government does is collect the information from the States, add it up, and then supply a seasonal adjustment. Which in turn means that we ought to be able to reconstruct the data by going to the States directly.

And on Friday, FRED helpfully posted all of the 50 States’, plus DC, Puerto Rico, and the Virgin Islands’ data. While it didn’t add them up, your trusty correspondent is capable of addition, which means that I can now present you with the YoY% changes in initial and continuing claims for last week, as well as what should be an extremely close estimate of the seasonally adjusted data.

Let me begin with the raw data. For the week ending September 27, unadjusted initial claims from all of the jurisdictions totaled 178,763 vs. 181,017 one year ago, or -1.3% less. Once we have this data, by adding it to the three previous weeks we arrive at a four week moving average of 4.2% higher. Continuing claims with the typical one week delay totaled 1,696,961 vs. 1,616,527 last year, or 5.2% higher. 

Since the YoY% changes are the most important, here are the FRED graphs through September 20 of that metric:

Note that both initial and continuing claims have been running in the vicinity of 5% higher YoY all year long, with the exception of most of July and August for initial claims (likely due to changes in the layoff and rehiring schedules for school districts). In other words, this past reporting week both the four week average of initial claims and continuing claims are right in line with their recent averages, while weekly initial claims were lower.

Now let’s turn to the seasonal adjustments. First, here is the comparison of seasonally adjusted weekly initial claims (dark blue) vs. non-seasonally adjusted claims (thin gray line):

Now here are SA (gold) and NSA (thin, grayish) continuing claims:

Both of these metrics are in the time of year where there is a hefty higher seasonal adjustment. Last year in the reference week, for initial claims, the adjustment was *1.2569; for continuing claims it was *1.1310. 

This gives us estimated weekly initial claims of 224,000, +6,000 higher week over week. Adding this to the previous three weeks of seasonally adjusted data already available gives us the four week moving average of 234,500, down -3,000 from the prior week. And estimated seasonally adjusted continuing claims were 1.919 million, -7,000 from the previous week. For graphic comparison purposes, here is are the seasonally adjusted numbers through the last federally reported week:

So long as the State by State data continues to get picked up, I will update this each week for the duration of the shutdown. In the meantime, the takeaway this week was a continuation of the recent “neutral” slightly higher YoY readings in the four week average of initial claims and also continuing claims.

Weekly Indicators for September 29 - October 3 at Seeking Alpha

 

 - by New Deal democrat

My “Weekly Indicators” post is up at Seeking Alpha.

All of the high frequency data that I gather in those posts comes from the Fed or its regional banks, the States, or private firms. That means it is almost completely unaffected by the federal government shutdown, and can be continually updated for as long as the shutdown lasts.

While the majority of the short leading and coincident data in the set continues to indicate expansion, there are underlying signs of increasing weakness, masked by a declining US$ and increased spending by the top income brackets.

As usual, clicking over and reading will bring you up to the virtual moment as to the state of the economy, and reward me a little bit for my efforts.

Alternate sources of employment data point to job losses, steady to higher unemployment rate in September

 

 - by New Deal democrat

As we all know by now, there is no US jobs report today due to the government shutdown. But there are a number of alternative measures which can give us a good estimate of what the jobs situation is.

Let me start first with the unemployment rate. Here is an update through last week of initial and continuing jobless claims, which lead the unemployment rate:

With the exception of late July and August, jobless claims have been consistently forecasting an increase of 5% (note: a percent of a percent) in the unemployment rate. Since last autumn the unemployment rate was 4.1% or 4.2%:

this forecasts a rate of 4.3% or 4.4% for September.

Which, as it happens, is exactly the mean forecast of the Chicago Fed’s new unemployment rate forecasting tool:

In contrast, the Challenger layoffs report indicated a lower number of newly jobless in September than in previous months, although the 2025 average remains elevated over 2024:

Now let’s turn to the jobs number itself.

The ADP employment report deservedly got a lot of attention several days ago when if indicated a loss of -32,000 jobs in September. Including revisions, the ADP report generally tracks close to the jobs report. Additionally, it is noteworthy that the ADP report already incorporates the preliminary benchmark revisions based on the QCEW, that won’t be included in the official jobs data until next February.

Justin Wolfers points out that the initial, unrevised ADP numbers do not correlate so well with the official jobs report:

But aside from early 2023, the three month average of the two series remains pretty close. And in the last three months, the ADP’s unrevised reports have averaged 42,000 jobs gained per month, compared with the 50,000 average for July and August in the official report. As revised for July and August - which Wolfers acknowledges is closer to the official BLS numbers, the ADP’s two month average was also 50,000, and its 3 month average including September is 23,000.

In short, the ADP does forecast very little if any jobs growth  at best “officially” in September.

Next, let’s look at the ISM manufacturing and services reports employment subindexes. To cut to the chase, here’s the graph for both covering the past three years (via TradingEconomics):

Since February, only in May has the employment weighted average of the two surveys (86% services, 14% goods producing), indicated growth. In September, manufacturing came in at 46.3 and services at 47.2, averaging 47.1, which is still better than the low average of 46.0.

Finally, let’s look at the employment components of the regional Fed manufacturing and services reports. There is very little graphic information available, but here is the average of the Empire State and Philly manufacturing numbers:

Here is Richmond’s:

And here is Texas’s:

The Kansas City Fed does not publish a graph for employment. But note that among the four that do, all trended down, 3 were negative, and 2 were close to or at their worst levels.

So the best way I have to present this to you is showing your the month over month change, and the actual number for September:

Manufacturing:

Empire: -5.6 to -1.2

Philly: -0.3 to +5.6

Richmond: -4 to -15

KC: +7 to +7

Texas: -12.2 to -3.4

AVERAGE: -3 to -1

Services:

NY: n/a

Philly: +13.2 to 9.4

Richmond: +1 to 0

KC: -14 to -12

Texas: -4.8 to -2

AVERAGE: -4.6 to -2

In sum, the alternative data sources all point to another weak, and likely contractionary, month for September. The unemployment rate likely held steady or ticked up 0.1%, and all three alternative sources for jobs information - ADP, ISM, and the regional Feds - indicate an actual decline in jobs.

Finally, let’s put this in some context for the economy. Here are the official jobs numbers, and real personal income excluding government transfer payments, both normed to 100 as of April:

Real income is flat to down, while jobs have increased by at best 0.1% in the 5 months since. This points to the economy being kept from recession by consumer and business spending, concentrated in AI-related industries and stock market wealth created by that boom (or, perhaps, bubble). 

Final August durable goods orders: more evidence that the AI related buildout is keeping the economy afloat

 

 - by New Deal democrat

Oddly, even though the government shutdown has crippled most reporting, the Census Bureau did update the durable goods report for August today, and it does reveal an essential bifurcation in the state of the economy.

First, here are the topline leading indicators: total durable goods orders (blue), core capital goods orders (red), and consumer durable goods orders (gold, right scale):

The difference between the first two and the last one is striking, and even more descriptively so when we measure them YoY:

As of the last report, consumer durable goods orders were dead in the water, down -0.1% YoY. By contrast, headline durable goods orders were up 7.6% YoY, and core capital goods orders up 4.0%.

The difference between the core and headline numbers is almost all driven by transportation orders (i.e., Boeing) (blue), not defense (red):

And a more detailed breakdown of new orders by industry reveals that the biggest increases have been computer-related (red) and communications (gold), although other sectors have grown significantly as well:

This is yet more evidence that the AI buildout in data centers and electronics updates are the driving force behind the continued expansion in the economy, fueling outsized stock price gains in the sector (and providing the fuel for wealth effect consumer spending); while the larger consumer sector is not growing at all.

EDITED TO ADD: And just to put an exclamation point on the data, here is Joe Wiesenthal with a breakdown of spending on AI data centers and everything else:

A note on initial jobless claims

 

 - by New Deal democrat

It’s Thursday, which typically means it’s time for the weekly initial and continuing jobless claims update. As we all know, the Federal government has shut down, because there is no budget for this fiscal year that began yesterday.

BUT, I went back and checked, and during the extended government shutdown in 2013, initial jobless claims were reported, and they were also reported at least for one week during the 2018-19 shutdown as well. 

Which makes sense, because they are simply compiled by adding up reports from the 50 States plus DC and Puerto Rico, and then using a seasonal adjustment.

But there has been no report this morning. 

As usual, my impulse is to find a workaround, which in this case is to get the raw data from the various States’ Departments of Labor or similar.  While I have neither the time nor the patience to do this for all jurisdictions, if enough of the bigger States publish their information, we should be able to arrive at a fairly reasonable estimate.

So far this morning none of the States I have checked, have updated their information for the last week. I will check later today, and if by then they have updated with claims through the week of September 27, I will follow up with a second post. Here’s hoping . . . .

In the meantime, via Carl Quintanilla, here is the latest graph on how the AI Boom (or bubble) in the stock market is fueling spending by the top 10% of consumers, which is what is keeping the economy afloat:

ISM manufacturing index continues to show slight contraction, as new orders retreat

 

 - by New Deal democrat

Typically the new month begins with important manufacturing and construction reports; but this morning the construction spending report for August became the first casualty of the government shutdown. 

The ISM manufacturing report has been a recognized leading indicator for the past 60+ years, although of diminished importance since the turn of the Millennium and China’s accession to regular trading status. While any number below 50 indicates contraction, the ISM itself indicates that the number must be under 42.8 to signal recession. 

Because of the report’s diminished importance, for forecasting purposes, I use an economically weighted three month average of the manufacturing and non-manufacturing indexes, with a 25% and 75% weighting, respectively. That briefly justified a “recession watch” during the summer, before the strong August rebound mainly in the services sector.

Today’s report continued the string of contractionary readings, although it rose slightly to 49.1. The more significant news is that the more leading new orders subindex, which rebounded to 51.4 in August, sank back into contraction at 48.9. Here is a look at both the total index (blue) and new orders subindex (gray) for the past three years (via Tradingeconomics.com):

Note that both remain slightly better than their low points in 2022-23, which is noteworthy because there was no recession then.

Hare the last six months of both the headline (left column) and new orders (right) numbers:

APR 48.7. 47.2

MAY 48.5. 47.6

JUN. 49.0. 46.4

JUL 48.0.  47.1

AUG 48.7. 51.4

SEP. 49.1. 48.9

The current three month average for the total index remains at 48.6, while the new orders rose slightly to a still contractionary 49.1. This is in accord with the recent regional Fed reports, which turned positive during August, but retreated somewhat in September.

As I indicated above, for the economy as a whole the weighted index of manufacturing (25%) and non-manufacturing (75%) indexes is more important. In the non-manufacturing report, the average of the last two months for the headline and new orders numbers has been 51.0 and 53.2, respectively. Pending the ISM report on services next Monday, the economically weighted headline number is 50.4, and the new orders average is 52.2.

If the ISM services report next week does not indicate any further downturn, this means that the economy as a whole continues to expand, albeit just barely.

August JOLTS report was weak, but foreshadows little

 

 - by New Deal democrat

In the past year, in contrast to much other data in the jobs sector, the JOLTS reports have been very much consistent with a “soft landing” jobs scenario. In the August report released this morning, the trend weakened slightly.

As a quick refresher, this survey decomposes the employment market into openings, hires, quits, and layoffs. So to begin, here are job openings, hires, and quits all normed to 100 as of just before the pandemic:

I regard openings are “soft” data. While they have trended down for several years, they have remained above their pre-pandemic levels, and are not of much concern to me. They improved slightly this month. The trend for the past 15 months has been flat to slightly downward. Meanwhile both openings and quits declined, the latter to the lowest level since December 2024, but the former came in at the lowest level since June 2015 except for June 2024 and the pandemic lockdown months! These are both “hard” data, and were both weaker readings.

Now let’s look at several components are slight leading indicators for jobless claims, unemployment and wage growth.

Layoffs and discharges, which have trended slightly higher since last summer, but have been rangebound since last autumn, remained so again, although the three month average was the highest in the past 12 months:

This generally accords with both the increase in the unemployment rate in 2023-24, as well as its plateauing this year (red, right scale), as well as the recent trend in continuing jobless claims.:

Next, the quits rate (left scale) typically leads the YoY% change in average hourly wages for nonsupervisory workers (red, right scale):

In August the quits rate declined slightly, tying its lowest in the past 12 months. This suggests that nominal wage growth may decelerate slightly further in the next several months.

Finally, I want to discuss why I don’t pay much attention to the “Beveridge curve,” which is the relationship between job openings divided by the number of unemployed, and the unemployment rate.

In the past several months there has been some modest hysteria about the number of unemployed exceeding the number of job openings (i.e., the ratio has fallen below 1:1), leading to speculation that the unemployment rate will increase.

But the historical view shows that there is no magic ratio of the Beveridge curve which is consistent with rising or falling unemployment. Rather, it is the *trend* in openings vs. the number of unemployed which has generally correlated with the *trend* in the unemployment rate. As shown below, with the Beveridge curve inverted for ease of comparison, the ratio was *always* below 1:1 for the entire period before 2018, and yet there were two extensive recoveries during which the unemployment rate declined:

Now here is the post-pandemic view. Again, we see that the *trends* correlate well, but there is nothing magic about the 1:1 level:

Just like the layoffs and discharges metric, this suggests that the unemployment rate may increase slightly. 

In short, this was a weak report. But it was a report for August, and we already have the August jobs report. It tells us very little about what to expect for September (if it is released, given the likelihood of a government shutdown before then), except that possibly the unemployed ent rate may increase.