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Offshore
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memenodes
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memenodes
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EndGame Macro
Behind the Lines of the Unemployment Insurance Weekly Claims Report And Why the Labor Market Isn’t As Strong As It Pretends to Be
Seasonally adjusted claims rose to 236,000, which is a noticeable jump but still inside the range we’ve been stuck in for over a year. The insured unemployment rate is just 1.2%, a level that historically lines up with a slowing economy. If you only glance at the seasonally smoothed charts the tight band of initial claims floating around 220k and the remarkably flat line of insured unemployment you’d think we’re gliding through a soft landing.
But that’s the 30,000 foot view, and at that distance almost anything looks calm.
Zoom in, and the tone changes.
The Raw Data Is Where the Cracks Show Up
The unadjusted claims, the ones not smoothed by holiday models and seasonal filters jumped 58% in a single week. That’s 313,140 real people filing for new benefits versus the 198k in the previous week. Yes, early December always brings noise, but this surge is too large to hand wave away. It tells you the labor market is losing resilience beneath the surface.
Even more telling is the insured unemployment in state programs where it spiked 15.8% in one week, far above what the seasonal factors anticipated. And the increases weren’t random they were concentrated in the classic early recession sectors…
•transportation and warehousing
•manufacturing
•construction
•accommodation and food services
These are the industries that turn first when demand softens and companies quietly prepare for leaner months ahead.
When these sectors flash red, history says the broader economy follows.
The Good Data Isn’t As Good As It Looks
Some improvements in the report aren’t signs of strength, they’re artifacts.
A few examples…
The low insured unemployment rate?
That number only counts people eligible for unemployment insurance. Gig workers, temp workers, part!timers, people who exhausted benefits, people forced into early retirement, they all disappear from the data. A low insured rate can mean everyone has jobs, but it can just as easily mean the safety net covers fewer people.
The drop in continued claims?
A fall in continued claims can mean folks are getting jobs… but it can also mean they’re running out of eligibility. With benefit durations shrinking in many states, exhaustion looks like “improvement” in the headline but is anything but.
This is why forensic reads matter, you have to interrogate the good data, not just the bad.
The Pattern That Stands Out
Across the entire report, one theme repeats…
The labor market is no longer buffering the economy.
All year long, continued claims have drifted higher despite rate cuts, easier financial conditions, and a Fed that’s saying it’s trying to protect employment. If this is the best the labor market can do with policy help, then it’s already running out of cushion.
The seasonally adjusted line is the heartbeat. The unadjusted line is the arrhythmia. And it’s the arrhythmia you watch when you want to know what comes next.
My Take
This is exactly the kind of claims profile you see right before a recession becomes obvious, not after. Not a spike. Not a collapse. A slow erosion of strength beneath a still orderly surface.
All the stress is showing up in the places you’d expect it to show up first…cyclical sectors, wage sensitive employers, and states tied to manufacturing and goods movement. And the big moves are in the unadjusted data, which tends to turn earlier than the sanitized headline number.
If the broader macro environment keeps weakening with tighter credit, higher refinancing costs, compressed margins then this labor market won’t act as a shock absorber. It’ll act as an amplifier.
That’s the real message of this report.
The ground beneath us is getting thinner, and the seasonal smoothing is the only thing making it look steady.
tweet
Behind the Lines of the Unemployment Insurance Weekly Claims Report And Why the Labor Market Isn’t As Strong As It Pretends to Be
Seasonally adjusted claims rose to 236,000, which is a noticeable jump but still inside the range we’ve been stuck in for over a year. The insured unemployment rate is just 1.2%, a level that historically lines up with a slowing economy. If you only glance at the seasonally smoothed charts the tight band of initial claims floating around 220k and the remarkably flat line of insured unemployment you’d think we’re gliding through a soft landing.
But that’s the 30,000 foot view, and at that distance almost anything looks calm.
Zoom in, and the tone changes.
The Raw Data Is Where the Cracks Show Up
The unadjusted claims, the ones not smoothed by holiday models and seasonal filters jumped 58% in a single week. That’s 313,140 real people filing for new benefits versus the 198k in the previous week. Yes, early December always brings noise, but this surge is too large to hand wave away. It tells you the labor market is losing resilience beneath the surface.
Even more telling is the insured unemployment in state programs where it spiked 15.8% in one week, far above what the seasonal factors anticipated. And the increases weren’t random they were concentrated in the classic early recession sectors…
•transportation and warehousing
•manufacturing
•construction
•accommodation and food services
These are the industries that turn first when demand softens and companies quietly prepare for leaner months ahead.
When these sectors flash red, history says the broader economy follows.
The Good Data Isn’t As Good As It Looks
Some improvements in the report aren’t signs of strength, they’re artifacts.
A few examples…
The low insured unemployment rate?
That number only counts people eligible for unemployment insurance. Gig workers, temp workers, part!timers, people who exhausted benefits, people forced into early retirement, they all disappear from the data. A low insured rate can mean everyone has jobs, but it can just as easily mean the safety net covers fewer people.
The drop in continued claims?
A fall in continued claims can mean folks are getting jobs… but it can also mean they’re running out of eligibility. With benefit durations shrinking in many states, exhaustion looks like “improvement” in the headline but is anything but.
This is why forensic reads matter, you have to interrogate the good data, not just the bad.
The Pattern That Stands Out
Across the entire report, one theme repeats…
The labor market is no longer buffering the economy.
All year long, continued claims have drifted higher despite rate cuts, easier financial conditions, and a Fed that’s saying it’s trying to protect employment. If this is the best the labor market can do with policy help, then it’s already running out of cushion.
The seasonally adjusted line is the heartbeat. The unadjusted line is the arrhythmia. And it’s the arrhythmia you watch when you want to know what comes next.
My Take
This is exactly the kind of claims profile you see right before a recession becomes obvious, not after. Not a spike. Not a collapse. A slow erosion of strength beneath a still orderly surface.
All the stress is showing up in the places you’d expect it to show up first…cyclical sectors, wage sensitive employers, and states tied to manufacturing and goods movement. And the big moves are in the unadjusted data, which tends to turn earlier than the sanitized headline number.
If the broader macro environment keeps weakening with tighter credit, higher refinancing costs, compressed margins then this labor market won’t act as a shock absorber. It’ll act as an amplifier.
That’s the real message of this report.
The ground beneath us is getting thinner, and the seasonal smoothing is the only thing making it look steady.
tweet
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Quiver Quantitative
JUST IN: Representative Chris Deluzio has signed Rep. Luna's discharge petition to force a vote on a congressional stock trading ban. https://t.co/X5dLirwyWd
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JUST IN: Representative Chris Deluzio has signed Rep. Luna's discharge petition to force a vote on a congressional stock trading ban. https://t.co/X5dLirwyWd
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