Breaching 300K

Initial US jobless claims fell below 300,000 last week, a milestone of sorts.

293,000 Americans filed for unemployment benefits in the week to October 9, the least since the onset of the pandemic (figure below). The range of estimates, from 43 economists, was 300,000 to 335,000.

The four-week moving average fell to 334,250.

Continuing claims for the week ended October 2 were 2.593 million. That too was better than expected. Economists had penciled in 2.67 million.

This marked the second consecutive week claims dropped 35,000. It’s a welcome about-face. Just a few weeks back, things were headed in the wrong direction (figure below). Unadjusted claims rose last week.

The data suggest that (and I’m just parroting what I can assure you was the boilerplate narrative on Thursday) businesses lucky enough to have labor aren’t keen on firing anyone.

JOLTS data for August (out earlier this week) showed the quit rate hit a record, while the huge disparity between vacancies and hires persisted despite a downtick in the overall number of job openings.

The last two nonfarm payrolls reports underwhelmed, suggesting the labor market still suffers from an acute shortage of workers.

There are, of course, myriad reasons why would-be laborers aren’t rushing back to the workplace. With enhanced unemployment benefits and assistance tied to emergency programs rolling off, the contention (popular among GOP lawmakers) that federal “handouts” are the proximate cause of labor market friction is being put to the test. As Bloomberg put it, rather bluntly, “the end of pandemic unemployment benefits and back-to-school didn’t lead to a sizable increase in hiring” last month.

This debate is playing out in a fractious political environment characterized by partisan rancor and infighting on both sides of the aisle as Democrats attempt to push the White House’s economic agenda forward.

Suffice to say the only thing wider than the chasm between job openings and hires is the disparity between questions and answers.