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Jobless Claims Tick Up Again; Current Account Deficit Worse

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Thursday, June 23, 2022

Weekly jobless claims
numbers are out again this Thursday morning, with more evidence that we’ve seen the bottom of our current cycle and are on the way back up. Last week’s totals reached 229K, down 2000 from the upwardly revised 231K the previous week. This makes the seventh of eight weeks north of the 200K level.

Now, 200K new jobless claims in a week is not a serious problem. But consider that back in early April we were clocking 168K per week, it’s clear we’re in a new mode. Over the past 12 weeks, we are averaging 203K new jobless claims, but over the past four weeks that number is now 223K.

Continuing claims, as we’ve seen of late, are a different story: 1.315 million is a smidge up from the 1.310 million from the previous week, but still hovering around the lows of the cycle. For five of the past six weeks we’ve seen this longer-term jobless claim number below 1.32 million. Going back to late March, we were around 1.53 million continuing claims.

What this tells us is one of two things: 1) that Americans who find themselves out of work typically find a new job right away, or 2) we’re still seeing Americans venture forth into their own enterprises — finding themselves off the payrolls of others but (in theory) paying themselves via a new business. However, without the assistance we’ve seen from the federal government and Federal Reserve — we no longer have a “cheap money” scenario that would make launching new business as accessible — chances are it’s more the former than the latter.

Our Q1 Current Account Deficit has now sunk to a new all-time negative level: -$291.4 billion — down from the -$274 billion analysts were expecting and way off the revised -$224.8 billion posted for Q4 2021. Imports grew $92.3 billion versus Exports, which gained $25.7 billion. In a little more than two years, our Current Account Deficit has gone from around -$100 billion to nearly 3x that.

This metric used to be a balance, until the early 1980s. In the early Oughts, we saw this deficit really collapse — but these days we’re making that look like child’s play. Maybe one day when we see our oil & gas trade come under control we may be able to right this ship.

Pre-market future are modestly positive this morning, off the highs we saw prior to the economic prints earlier. The Dow is currently +75 points, the S&P 500 is +18 and the tech-heavy Nasdaq, proving stronger than its index brethren of late (though still has the biggest hill to climb), is +85 points roughly 20 minutes before the opening bell.

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