Despondent Apathy

US jobless claims fell a fifth week to a fresh pandemic-era low, in what I suppose is “incremental evidence of labor market momentum.”

I’m just reciting the boilerplate copy. It’s impossible to make definitive statements about what an individual data point conveys about the economy at the current juncture. Everything is distorted. Nothing is what it seems.

Despondent apathy aside, the 269,000 headline initial claims print was better than estimates. The four-week moving average dropped to 284,750 (figure below).

That’s getting pretty close to “normal.” In fact, depending on what you consider to be relevant historical precedent, I suppose it could be construed as better than normal.

Whatever it is, it marked a fifth consecutive weekly decline (figure below).

Continuing claims beat too, printing 2.105 million versus consensus of 2.15 million.

The market largely ignored the figures for obvious reasons. NFP loomed, Q3 GDP is in and the taper announcement was digested with relative alacrity. The time when weekly claims was the most important macro data point are long gone.

More notably, productivity slumped in the third quarter by the most in… well, in a very long time. The 5% plunge was the steepest in four decades (figure below).

Consensus expected a 3% drop. The range, from nearly four-dozen economists, was -4.5% to 0.1%.

Productivity is a volatile series and the pandemic complicates things further. But it doesn’t take an economist to put these particular puzzle pieces together.

Last week’s ECI data showed wages and salaries rose at the swiftest pace on record during the third quarter. Hence, businesses are paying more for every unit of output (figure above).

Take it (all) for what it’s worth, which probably isn’t much in an environment rife distortions and defined by uncertainty.

What was it I said here at the outset? Oh, right: It’s impossible to make definitive statements about what an individual data point conveys about the economy at the current juncture.