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Jobless Claims, Q1 GDP Both Fall; Macy's, Dollar Tree Beat

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Thursday, May 25, 2022

This morning, as most Thursday morning’s, we see new weekly jobless claims data. Initial Jobless Claims last week went down by 8000 to 210K, which is good news following two of the previous three weeks moving noticeably higher. Today’s headline number also beat the 215K analysts had been expecting.

Continuing Claims did move up, however, to 1.35 million. However, this is off the 1.315 million we saw the previous week, which was the lowest weekly print since before Francis Ford Coppola had made a successful movie. At 1.35 million, we’re still seeing exceptionally strong employment in the U.S. currently — or at least as of two weeks ago, from which these numbers are reported.

The first revision to Q1 GDP is also out this morning, sliding a tad further into the negative to -1.5% from the -1.4% first reported, and worse than the -1.3% expected. We hope to see this snap back in Q2 or else we’ll be looking at the first technical recession (two straight quarters of negative growth) since the start of the pandemic.

Consumption jumped notably to 3.1% from 2.7% originally reported, while pricing stayed firm at 7%, with the Pricing Index 8.1%. Personal Consumption Expenditures (PCE) quarter over quarter dipped 10 basis points to +5.1% — still high, considering what we’re up against on inflation metrics.

None of this has had much effect on pre-market futures, which are buoyant on strong Q1 earnings results from Macy’s (M - Free Report) and Dollar Tree (DLTR - Free Report) — +12% and +15% this morning, respectively — among others. The Dow has gained another +170 points at this hour, while the S&P 500 is +20 and the Nasdaq is +30 points. We continue to see blue chips outgain tech and the wider market, but we are happy to take positive index developments of whatever stripe.

After the opening bell, Pending Home Sales for April are expected to have dropped -2.0%, following -1.2% in March. Higher prices — both in input costs for supplies and workforce as well as mortgage rates scaling higher — are keeping interested parties from pulling the trigger on home buys, and we’ve seen the softening in the housing market in other metrics of late, as well. A continuation of this will eventually start showing up in inflation data, as well.

Tomorrow morning we’ll continue the economic narrative with PCE inflation for April. In our last read, we saw +6.6% year over year PCE inflation, which is something we’re obviously interested in seeing some down. Should we get some notable good news on this tack, we may be looking at the first up-week for market indices in many weeks.

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