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Jobless Claims Still Bouncing Off Cycle Lows: 362K, 2.8M

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Thursday, September 30, 2021

New Initial Jobless Claims are out this morning, and for the third week in a row they are notably higher: 362K was up 11K new claims from the prior week’s 351K, and even higher than the 330K anticipated. This is the highest level in the past eight weeks, and is really bouncing off the cycle-low 312K we saw the week of Labor Day. Where it looked for a time as if we were headed sub-300K on new weekly jobless claims, we’re now back up closer to 400K.

Continuing Claims, reported from a week prior, are also off cycle lows, coming in at 2.802 million. This is lower, however, from the previous week’s downwardly revised 2.820 million. Post-Covid lows came the prior week, at 2.715 million. In both new or existing jobless claims we are seeing increases, but these are not the metrics that tell us in detail where the jobs — or lack thereof — are in the labor market. We need next week’s monthly jobs reports for that.

Also, a fresh, final revision to Q2 GDP is out: 6.7% is 10 basis points higher than expectations, on Consumption levels that haven’t been seen in years, coming in at an upwardly revised 12%. The Personal Consumption Expenditures (PCE) index came in at 6.1%, which is a 40-year high. Core PCE, which strips out volatile near-term pricing, was also +6.1% — a 38-year high. So the American consumer, regardless of his or her current job status, is pulling his or her weight in the economy.

Exports were notably revised higher, 7.6% versus 6.6% in the last read, while Imports rose to 7.1% from 6.7%. Q2 is widely expected to represent peak post-Covid growth in the economy. That said, it may be important to recall the Fed just last week lowered its full-year GDP projections to 5.9%, down from the 7.0% originally printed. The rise of the Delta variant in certain crucial regions, as well as supply chain/wage growth/inflation tightening their grip on the recovery, are largely to blame.

U.S. government funding to raise the debt ceiling has been agreed upon through December 3rd (nobody knows how to kick the can like the U.S. Congress), which has until midnight tonight to be signed by President Biden. The House is scheduled to vote on its ambitious infrastructure plan today, however expectations are if House Speaker Nancy Pelosi does not have the votes from Democratic representatives, this can may get kicked, as well.

Market indexes are off pre-open highs, with the Dow currently +85 points (from +150 roughly an hour ago), the S&P 500 +10 points (from +20 in the past hour) and the Nasdaq +48 points (off the +75 earlier). Much interest is still focused on what happens in Washington DC today, and in the weeks to come. We’ll also get new Chicago PMI numbers after the market opens, as well as more verbiage from voting Fed president and Chairman Powell.

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