- by New Deal democrat
I want to write an extended discussion of the April retail sales report released this morning, to tease out the effect of the spike in gas prices, but first let me do my usual weekly update on jobless claims. These have historically been a good short leading indicator for the economy, but it is possible that is being distorted now.
As per the last six months, new jobless claims, along with the Boom (or maybe bubble) in the stock market, are the most positive of all of the current economic indicators. For the week, initial claims rose 12,000 to 211,000, while the four week moving average rose 750 to 203,750. Although I won’t put up the long term historical graph, these continue to be lower than at any point between 1970 and 2018, and at the low end thereafter. Continuing claims, with the typical one week delay, rose 24,000 to 1.782 million. Historically this is also lower than at any point between 1975 and 2018, although they were much lower in the immediate post-pandemic Boom of 2021 through mid-2023:
As per usual, the YoY% change is more important for forecasting purposes, and so measured initial claims were down -6.6%, the four week average down -11.1%, and continuing claims down -5.4%:
Since it is early in the month, I’ll dispense with my typical look at what that might mean for the unemployment rate. But let me briefly address why jobless claims might be so historically low, particularly as the US population has doubled since 1970. Indeed, as a percent of the labor force, or of the US population as a whole, the number of claims in the past six months has been tied for the lowest ever with brief periods of time in 2022 and the end of 2023, as shown in the below historical pre-pandemic graph that is adjusted to show the current rate at the “0” line:
Is business humming in a way it never has before? Probably not. The most likely explanation has to do with immigration and the deportation raids that became more widespread in the past year.
Let me state right off the bat there is really no good, on-point statistic that I can find. The situation is opaque, but if we look at monthly employment and unemployment statistics by native vs. foreign born status, and by ethnicity, at least some light may be shed.
Every month the Household Survey in the Employment report includes numbers for the employment level of native vs. foreign born persons. Since these are not seasonally adjusted, the best way to look at them is the YoY% change:
I should note that the Household Survey has shown absolute YoY declines in employment for the past several months. What is noteworthy for this discussion in the above graph is that the YoY employment level for immigrants turned negative rapidly last summer as immigration raids became more widespread, and with one exception has remained negative ever since.
Similarly, the Household Survey tracks the unemployment rate by several ethnic groups, including Hispanic or Latino. Again, these are not seasonally adjusted, so the below graph tracks the change in the percent unemployed YoY:
Note that the change in the unemployment rate turned lower for immigrants (gold) by last summer, and with two exceptions has remained lower ever since, even as the unemployment rate in total (dark blue) and for the native born (purple) has remained higher. And the unemployment rate for Hispanics has generally been the lowest of all (red).
Either uniquely immigrants, especially HIspanics, are not being laid off — *extremely* unlikely — or they are not making claims or even willing to discuss their job status with Census Bureau phone interviewers, which is much more likely. This seems particularly true since both the employment level and the rate of those who are unemployed have *both* declined, suggesting a reluctance to interact with the system.
I want to point out that the above explanation is necessarily speculative, and based on information that remains murky. But it does seem to explain the unusual information about jobless claims we’ve been getting for this year.
