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As the Debby effect dissipates, initial claims remain positive for the economy

Summary:
– by New Deal democrat For the last several months, jobless claims have been buffeted first by unresolved post-pandemic seasonality, and then also by the effect of Hurricane Debby on claims in Texas. The first is now abating, and the second has ended, as this week claims in Texas declined to their typical level last year at this time. To the numbers: initial claims rose 4,000 to 232,000, while the four-week moving average declined -750 to 235,000. With the typical one week delay, continuing claims rose 4,000 to 1.863 million: The YoY% change removes the effects of unresolved seasonality and is the best metric to use for forecasting. Measured this way, initial claims were down -3.7%, and the four-week average down -4.4%. Continuing claims

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 – by New Deal democrat

For the last several months, jobless claims have been buffeted first by unresolved post-pandemic seasonality, and then also by the effect of Hurricane Debby on claims in Texas. The first is now abating, and the second has ended, as this week claims in Texas declined to their typical level last year at this time.

To the numbers: initial claims rose 4,000 to 232,000, while the four-week moving average declined -750 to 235,000. With the typical one week delay, continuing claims rose 4,000 to 1.863 million:

As the Debby effect dissipates, initial claims remain positive for the economy

The YoY% change removes the effects of unresolved seasonality and is the best metric to use for forecasting. Measured this way, initial claims were down -3.7%, and the four-week average down -4.4%. Continuing claims were up 3.7%, the fifth best reading in almost 18 months:

As the Debby effect dissipates, initial claims remain positive for the economy

Thus, jobless claims remain is a positive short leading indicator for the economy, while the persistent slight increase recently in continuing claims tells us that it is slightly weaker than previously.

Here is the updated comparison with the unemployment rate:

As the Debby effect dissipates, initial claims remain positive for the economy

This year has departed from the near-universal relationship of the past 60 years in which initial claims led the unemployment rate. What this tells us is that a significant portion of the people telling the BLS that they are unemployed were not previously working. They are either new entrants, or re-entrants, to the labor force, and very likely recent immigrants. In other words, the rise in the unemployment rate is not telling us that there is a recession, but rather that the wave of recent immigrants, who easily found employment during the 2021-22 Boom, are having a harder time finding a job now.

The Bonddad Blog

Hurricane Debby (2024 – Juanjose234), Hypothetical Hurricanes Wiki | Fandom

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