U.S. NON-FARM PAYROLLS…NOT WHAT THEY SEEM TO BE…


…I don’t think it as good as it appears to be.


IT IS USUALLY THE CASE THAT WE TAKE THE ECONOMIC DATA WE GET AT FACE VALUE. TRADERS REACT TO THE DATA AND THEN WE MOVE ON “…HEY! WHO WANTS A PUMPKIN-SPICED LATTE?!?”. To some degree we trust the data; so why think too deeply about the details? Even if you don’t buy into the process wholeheartedly, most data series have a long enough history to which the recent reports can be compared and contrasted. If the man always has his thumb on the scale we can at least discount the pressure the thumb adds to the calculation and figure out how the latest reports compare with historical information. Besides, a furious charge at a windmill isn’t usually a winning proposition. Nothing to see here, let’s move along.


But wait…gotta sec…? There’s one report, it’s out every week, that I just don’t quite get. It’s not the only statistic I don’t completely understand, I’m not saying that…but maybe, because of the frequency and the way that it is often held up as a star-data, it grates on me more than the others.


I DON’T THINK IT IS AS GOOD AS IT APPEARS TO BE. The weekly jobless claims are quite low! Since the time when the Unemployment Rate fell to and below 4.0%, the weekly unemployment benefit claims have averaged just 220k per week. That’s a similar result to the last time the jobless rate was this low.


Back in early 2018 and up to the Pandemic, the claims averaged 218k. The lower 200k results are indeed quite low. For instance, in the decade leading up to the Pandemic the average for weekly claims was slightly over 300k and in the decade leading up to the 2008/2009 recession the claims average was closer to 350k. Of course, aside from a few months at the end of 2000, the Unemployment Rate was not down at 4.0% or lower during those times. Prior to the period that began in 2018, the low for weekly claims was never below 250k and rarely was it lower than 300k.


Source: Bloomberg


18 | ADMISI - The Ghost In The Machine | Q1 Edition 2024


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