Thursday, April 8, 2021
For the second week in a row, Initial Jobless Claims are moving in the wrong direction. After hitting cycle lows the week of March 21 at 658K new claims — the first sub-700K figure of the pandemic era — last week’s new claims number disappointed at 719K. This morning’s headline for initial claims in the past week hit 744K, 16,000 more than the upwardly revised figure from last week.
Continuing Claims dipped slightly to 3.73 million from the downwardly revised 3.74 million from two weeks ago. These numbers have trended in a much more orderly fashion, as government programs like Pandemic Unemployment Assistance (PUA) absorb many of the longer-term unemployed based on pandemic conditions. According to last week’s monthly jobs numbers, approximately nine million fewer Americans are unemployed than in February 2020, before pandemic conditions hit.
However, this is not the direction we expect to see new labor market numbers trend. From ADP to BLS, over the past two months we’ve seen big advancements in our employment. Shops and restaurants are reopening around the country at last, meeting advancing vaccination programs and plenty of pent-up demand from consumers. That we should have more people making new jobless claims does not seem to fit the narrative.
One thing that comes to mind from past labor force growth scenarios: the better the jobs market, the more people begin to look for work. It’s the reason we can see both climbing overall jobs totals and a climbing Unemployment Rate at the same time. But how this applies to filing for unemployment is less clear. Perhaps recent shutdowns is populous states like California and New York have had a near-term rise in new claims.
Yesterday, we heard from Fed Presidents Rob Kaplan from Dallas and Tom Barkin from Richmond, VA. Both gentlemen echoed Fed Chair Jay Powell’s sentiment earlier that financial supports must remain in place until evidence of the recovery has finally made it to the U.S. economy, and not before. Today, St Louis’ James Bullard and Chairman Powell speak again. Perhaps they’ll have some further insight why weekly jobless claims remain stubbornly high?
This morning’s pre-market is once again mixed, with the blue-chip Dow index looking to open down 20 points, the S&P 10 points to the positive — for a new all-time high — and the tech-heavy Nasdaq +100 points at this hour. We’ve seen a weeks-long rotation into value-play cyclicals from growth-oriented tech plays, but today looks like the market did last fall. The Nasdaq is still about 3% from its own all-time highs, but looks to making ground this pre-market.
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