- by New Deal democrat
Let’s take our weekly look at jobless claims, recently perhaps the most positive datapoint in the entire economy.
And it continued to be so this week. New jobless claims rose 6,000 to 214,000, while the four week moving average rose 750 to 210,750. With the typical one week lag, continuing claims rose 12,000 to 1.821 million:
As a refresher, here is the entire 50+ year series of both new and continuing claims until the pandemic, with current values normed at the 0 line to show just how historically low the current levels are - and that doesn’t even take into account that the US population has doubled during that time:
Initial claims in particular were never this low during the entire period from the early 1970s until just before the pandemic. Basically, right now if you have a job, there is very little chance of your being laid off.
As per usual, the YoY levels are more important for forecasting purposes. As a quick refresher, that’s beause recessions have started and ended at very different absolute levels of jobless claims, whether or not adjusted for population. But they have a relatively consistent pattern of being likely once initial claims have risen more than 12.5% YoY and stayed elevated above that level for 2 months:
As of this morning’s report, initial claims are lower than -4.5% YoY, the four week average is lower by -4.6%, and continuing claims are lower by -1.0%:
Jobless claims are very much forecasting continued economic growth over the next several months.
Finally, I almost always point out that jobless claims lead the unemployment rate. Here is the historical YoY look for the 50+ years before the pandemic:
And here is the YoY comparison of both initial and the smoother but less leading initial+continuing claims with the YoY% change (note that is a % of a %) in the unemployment rate for the past several years:
Jobless claims are forecasting continued downward YoY pressure on the unemployment rate, which was 4.2%-4.3% last spring. IN other words, jobless claims are forecasting the unemployment rate to decline below 4.2% to 4.1% or even 4.0% in the next several months.
So we leave off where we began: jobless claims are currently the most positive of any US economic data being released.
