For the second week in a row, US jobless claims printed at rock-bottom levels, underscoring the tight labor market at the center of various “higher-for-longer” Fed narratives.
Initial claims were 204,000 in the week to September 23, Thursday’s release showed. That was just barely higher than the prior week’s 202,000, the lowest since January.
Consensus expected 215,000 from the latest update. The range of estimates, from four-dozen economists, was 203,000 to 240,000. So, the actual print (bascially) matched the lowest estimate.
The four-week moving average is now just 210,750, the lowest since early February. Actual, unadjusted claims fell to 174,600.
Meanwhile, the final read on Q2 GDP was unchanged from the second estimate. The economy grew at a 2.1% pace last quarter.
The BEA release included a raft of revisions. Current-dollar GDP and related components were revised going back a decade.
Notably, personal consumption was revised sharply lower for Q2. The PCE component of GDP rose at a 0.8% annual rate, just half the pace reported in the advance release and down from 1.2% in the second estimate.
Were it not for a revision to Q1 2022’s PCE figures to show flat spending, Q2’s personal consumption print would count as the slowest of the pandemic era.
In addition, the headline price index was revised to show just a 1.7% gain, down from 2%. The core PCE prices print was unchanged at 3.7%.
It looked as though markets were inclined to jump on the personal consumption revision and, to a lesser extent perhaps, the cool headline price index print, where “jump” means treat them as incrementally dovish developments.
At the least, we can say the downward revision to the spending print helped offset another very low read on initial jobless claims vis-à-vis the “higher-for-longer” narrative.
That might seem misguided given the Q2 GDP revisions are by now months stale while weekly claims are among the only “real-time” macro indicators we have. But given the market’s obsession with the Q4 spending slowdown narrative (in light of dwindling pandemic savings buffers, the restart of student loan payments and on and on), the idea of a much softer spending impulse in Q2 may garner outsized attention.
