Jobless claims up most since ’21

👷‍♀️ WHAT JOBLESS CLAIMS TELL US ABOUT THE ECONOMY 👷‍♂️

Rising initial jobless claims — or the amount of people filing for unemployment for the first time — are one of the classic early signs of an economic recession.

It’s pretty simple: when unemployment is rising, people have less income to spend, and consumer spending is 70% of GDP growth.

Bad news first: initial jobless claims ARE rising. And today, data showed initial jobless claims rose to 260K, the highest level since October 2021. The four-week average is now 237K.

BUT are they at recession levels yet? Maybe not.

I like to track the four-week average of claims relative to the size of the labor force.

Why? 230K in claims hits differently when the number of people actively working or searching is 8% higher than it was 15 years ago.

So how do claims as a % of the labor force look?

Well, the four-week average of claims is about 0.14% of the labor force, well below the 0.3% average we’ve seen in the first month of all recessions dating back to 1970.

For us to see claims reach even a 0.2% level, the four-week average needs to rise to 333K

For 0.28%? 467K

So basically, we’re in this grey area of *concerning, but not alarming* for one of the earliest signs of economic trouble.

Which TBH, is a good way to describe how the economy has felt for months.

#jobs #economy #markets #investing #personalfinance #money

U.S. jobless claims just hit a new 18-month high of 261k this morning.

Here’s why this is a big deal…

Labor is one of the most lagging of all lagging economic indicators.

And it makes sense why that’s the case – recessions start with the consumer coming under pressure, leading to slower sales in the economy, and thus lower corporate profits (which started declining in Q4 2022). Corporations don’t immediately start firing workers the minute sales start slowing – but after enough pressure, they have no choice.

This means that the labor market typically holds up well in the early stages of an economic slowdown, with robust job growth and low unemployment, until the economy is right on the brink of a recession.

It appears we may be approaching that point now. Not only have jobless claims spiked to 18-month highs, but the unemployment rate recently jumped from 3.4% to 3.7%.

Yesterday, I showed how the leading economic indicators have been collapsing for months… but now, even the key lagging indicator of the labor market is now breaking down.

It’s all part of a growing body of increasingly insurmountable evidence all pointing in one direction: a hard landing, and sharp recession in the imminent future.

#stocks#stockmarket#finance#economy