376,000 Americans filed for unemployment benefits last week, down 9,000 from the previous week to yet another new pandemic-era low.
The market was looking for 370,000. Technically, the headline was a “miss,” but at this juncture, market participants are just looking for a continuation of the trend lower. And they continue to get it (figure below).
The four-week moving average is on the verge of breaking below 400,000.
Continuing claims were 3.499 million. That was better than the 3.65 million the market wanted to see.
The drop in initial claims was the eighth in nine weeks (figure below).
I wish I could provide something in the way of “unique” color for this, but the story is all too familiar. Across Pandemic Unemployment Assistance, Pandemic Emergency UC and continuing claims, some 15 million people are receiving assistance. But headline initial claims are well on the way to normalizing. That suggests the labor market is healing, even as getting a “clean” (or “real”) read isn’t possible.
There’s little doubt that pandemic-related programs are a factor in explaining the record gap between vacancies and hires (figure below).
It’s not necessarily a matter of “laziness” or “freeloading.” Rather, it’s a financial decision. Ironically, it’s also a market decision, it’s just that the government has put its finger on the scale in favor of labor instead of capital this time. Remember: Socialism for the rich (in all its various manifestations) is perfectly fine in America. But socialism for the people who need it, well, that’s just… err, socialism.
The bottom line is that employers need to pay up handsomely to entice workers. That situation isn’t entirely attributable to enhanced assistance for the jobless, but it’s a factor.
Of course, some of the lingering angst and drama could be ameliorated if corporate management teams would just accept reality, raise wages materially, pass a portion of the costs along to consumers and just eat the rest via margin compression.
If it’s inevitable, why put it off? And why baby step it? That doesn’t mean you have to pay baristas $100,000 per year to make white chocolate mochas, but it might mean paying them more than you ever would have considered pre-pandemic.
Have you ever laughed to yourself when you think about what the margins probably are on a Starbucks drink? I have. I don’t know how much a “Venti” is now, but I know that the last time I had one some seven (?) years ago, the price seemed absurdly disconnected from the likely cost of “crafting” it.
Oh, and incidentally, Starbucks is apparently seeing so much demand that they’re running out of cups and syrup. “Cake pops, cup stoppers and mocha flavoring are among the items that have run out in places at times,” according to The Wall Street Journal, citing baristas. A spokeswoman for the company told the Journal that “shortages of some items are temporary and vary by store and market.”