US Jobless Claims Leap In Boon To Doom

Macro watchers and market participants of all shapes and sizes are on US recession watch.

Canary-spotting is a living for so-called “doomers” (bless ’em), but in 2023, it’s turned into a national pastime. The Fed is 500bps into the most aggressive tightening cycle in a generation, a handful of banks failed, inflation is still running very high, consumer sentiment is abysmal and so on.

And yet, the US labor market is bulletproof, notwithstanding 417,500 YTD job cuts+.

In lieu of a negative NFP print, doomsayers will take any uptick in jobless claims they can get. On Thursday, they were lucky: Initial claims spiked 28,000 to 261,000, the highest since October of 2021.

Those of you following along these past two months will immediately note that we’ve seen this before. Claims likewise rose sharply a few weeks back, and it turned out that fraud in Massachusetts was behind the increase.

I assume this uptick is “real,” but real is a relative term when it comes to statistics, and also when it comes to climate change (until your kids can’t go to the park because it’s orange smogging outside.)

Last week’s increase was the largest in nearly two years, but it’d be a mistake to get excited about it unless and until there’s an encore. Continuing claims in the week to May 27 dropped to 1.757 million, fewer than anticipated.

The headline initial claims print was ahead of every estimate from nearly four-dozen economists. The highest “educated” guess was 260,000. Actual, unadjusted claims were 219,400, up around 10,000 from the prior week.

Invariably, the claims jump will be cited in recycled versions of the same short missives market participants are subjected to every, single Thursday. It’s always the same set of ostensible harbingers: WARN notices, a belabored formula for determining when a recessionary surge in claims is imminent and a couple of other factoids, paired with some reshuffled copy to differentiate this week’s installment from last week’s. (“Hey, it’s a living, dammit!”)

Maybe this jump in claims is “the big one” (Elizabeth), maybe it isn’t. All we can really say on Thursday is “Thank you” to the Labor Department for giving us something to talk about other than toxic wildfire smoke.