406,000 Americans filed for unemployment benefits last week, a fresh pandemic low and 38,000 fewer than the previous week’s total, which was unrevised.
On this front, at least, the US is now well on the way to something like “normal,” although still months away from any declarations about “woods” and being “out of them.”
The four-week moving average dropped to 458,750. Initial claims have more than halved since Joe Biden took office (figure below).
The market was looking for 425,000 on the headline, so Thursday’s figure was a beat.
Continuing claims were 3.642 million, also fewer than expected. Initial Pandemic Unemployment Assistance claims fell too.
The drop in the headline print marked the sixth decline in seven weeks (figure below).
You’d think the ongoing decline would undermine the argument (voiced loudly in too many corners) that America’s jobless are content to stay home and collect government assistance, and therefore ongoing support measures are superfluous at best and deleterious at worst.
But political talking points aren’t so easily displaced. Just ask anyone still claiming the Trump tax cuts are going to “pay for themselves” if we just wait around long enough.
Meanwhile, durable goods orders missed (-1.3% versus expectations of a 0.8% gain), but that’s probably not what markets will focus on. Nondefense capital goods ex-aircraft and parts printed a huge beat, rising 2.3%, more than double consensus (figure below).
Note the sharp upward acceleration (black line). If you pan out on that chart (which I didn’t, because it makes the MoM bars difficult to see), the level (i.e., the nominal amount) has now forced a recalibration of the y-axis.
Finally, headline and core inflation were revised higher in the second read on Q1 GDP, as was personal consumption (to 11.3% from 10.7%).
On balance, Thursday’s data pretty clearly suggested the US economy isn’t decelerating or, at the least, that any such worries are overstated.
And yet, the upward revision to consumption in the GDP data may “contribut[e] further to the risk [that] much of the near-term growth potential has been front-loaded,” as BMO’s US rates team put it.
