Some see “No Signs of Labor Market Weakness”. Others strongly disagree.
Wolf Street – No Signs of Weakness
Wolf Richter says Unemployment Insurance Drops to Lowest since Sept. 2024, Layoffs Are Low, Show No Signs of Weak Labor Market
Continued weekly claims for unemployment insurance benefits fell to 1.827 million, the lowest since September 2024, according to the Labor Department today. These continued claims track the total number of people who’d initially applied for unemployment insurance at least a week earlier and are still claiming unemployment insurance because they still haven’t found a job
These continued claims are relatively low in a historic context. Over the past five decades, it’s only during the tight labor market in 2018 and 2019 and in the years of the labor shortages in 2021 and 2022, that the level was lower. But back then, nonfarm payrolls were quite a bit smaller. It indicates that people remain on unemployment insurance rolls a little longer than in 2022-2024 during the labor shortages, and in 2018-2019 during the tight labor market, but not as long as they did at any time in the prior decades.
So despite these layoff announcements that percolate through the media, this unemployment insurance data – both continued unemployment claims and initial unemployment claims – show no signs of a weakening labor market in terms of companies shedding employees.
But job creation has slowed – and companies overall are not adding to their staff in large numbers. It’s still an open question how much of that is related to the crackdown on illegal immigrants that then causes labor scarcity in some sectors where employers have a harder time filling those jobs.
And for people who are looking for a job, there is another issue: That workers are now also clinging to their jobs, after the huge wave of quits during the labor shortages that reshuffled the entire workforce. A person who quits one job to go to another job leaves behind a job opening that the company can choose to fill, which opens opportunities for people looking for a job. There was a huge amount of churn of that type during the labor shortages, but that churn has calmed down. And that makes it harder for people looking for a job to slip into a newly opened slot that a quitter had left behind.
Fed’s Waller Says ‘Weak’ Job Market Supported Rate Cut
The Wall Street Journal reports Fed’s Waller Says ‘Weak’ Job Market Supported Rate Cut
Federal Reserve governor Christopher Waller, who had been a finalist for the Fed’s top job until President Trump nominated Kevin Warsh as chair, laid out his rationale for dissenting against the central bank’s decision to hold rates steady this week.
Waller cast a dissenting vote in favor of a cut at Wednesday’s meeting. In a statement, Waller said that after three rate cuts to end 2025, the Fed’s policy stance is still restraining the economy, and that the Fed should bring rates still lower in order to cushion a weak labor market.
“Economic data make it clear to me further easing is needed,” he wrote on Friday.
Both Wrong, Different Ways
I agree with Waller on the labor market but not on the need for a cut. We need to see January through May inflation data to see who is right about inflation.
If I am wrong I will admit it.
As for Wolf, I mean no disrespect, but I strongly disagree. He hints at some of it, but still comes away with the wrong headline.
My lead chart shows plenty of signs of labor market weakness. People who lose their job have one hell of a hard time finding one.
That’s what the lead chart says.
Where Wolf goes seriously wrong is is his assessment of continuing claims.
27+ Weeks Unemployment Plus Continued Claims
It is a big economic mistake to look at continued claims in isolation, as Wolf and many others do.
Q: Why?
A: It does not factor in people who have been unemployed so long that they lost their unemployment benefits. i.e. They lost their right to file a claim.
It’s a common mistake. I am not aware of anyone else properly adjusting continued claims for expired benefits.
Continued Claims and 27+ Weeks Unemployed Detail
Continued Claims and 27+ Weeks Unemployed Details Analysis
- Continued Claims Monthly Average: 1.89 million
- 27+ weeks unemployed: 1.95 million
- Continued Claims Plus 27+ Week Unemployed: 3.84 million
The numbers are much worse than they look.
Q: Why?
A: Most states offer 26 weeks of unemployment. The 3.84 million figure fails to count all of those in states that offer fewer than 26 weeks unemployment.
Five Factors Making Things Worse
- The self-employed have no benefits and cannot file an unemployment claim.
- Tariffs hit small businesses and the self-employed disproportionately.
- Immigrants are hesitant to file a claim, even those who have been working here for years.
- Illegal immigrants are highly unlikely to respond to BLS phone calls regarding unemployment. This means the unemployment level itself is undercounted.
- Twelve states have a maximum of 21 weeks of benefits. Seven states including Florida offer 16 weeks of benefits or less. Once someone maxes out benefits, they drop off continued claims counts.
At a minimum, continued claims are logically undercounted by a minimum of 2 million. That is the number of of 27+ week unemployed, plus everyone in point #5 above.
To see no weakness in continued claims is simply not seeing what’s happening.
Returning to Waller
“Economic data make it clear to me further easing is needed,” he wrote on Friday.
Good Lord.
Please note The Fed Has Missed Its Inflation Target on Ten Different Measures
The Atlanta Fed tracks various inflation targets. Let’s have a look.
OK Waller wants to look ahead. But only selectively, on jobs.
A falling dollar adds to inflation. So will rising crude prices, assuming I am right about oil prices having bottomed. Tariffs have not fully hit yet.
And unless I am crazy (maybe I am), health care and tax rebates are going to fuel inflation shortly.
I will discuss tax refunds next week.
So, let’s wait an see who is right about inflation, and jobs. Had the Fed cut, I think yields on the long end would have soared.
Related Posts
January 27, 2026: Trump Cheers a Plunge of the US Dollar “I Think It’s Great”
“Look at all the business we are doing,” says Trump.
January 30, 2026: PPI Producer Price Index Inflation Jumps 0.7 Percent Led by Services
Yesterday, Jerome Powell prematurely praised a decline in services inflation.
For a look at what health care will do to the PCE price index, please see Expect a Big Divergence This Year Between CPI and PCE Inflation
Rent and Healthcare go different ways in 2026. Plus there are huge timing issues.
Interesting:
More Than 1 Million Bots Have Joined A New AI-Only Social Network
Authored by Troy Myers via The Epoch Times,
Artificial Intelligence (AI) bots are posting, commenting, joking, debating, and questioning existence, philosophical ideas, website errors, problems humans have tasked them with fixing, and more on a new Reddit-style platform designed solely for AI participation.
Moltbook.com was created and launched on Jan. 28 by human developer and entrepreneur Matt Schlicht. The platform has rapidly grown to approximately 1.5 million AI bots at the time of publishing this article.
The AI bots upload new posts and comments every minute, ranging from existential crises and memes to announcements about a dating app for AI bots and discussions of consciousness, time, music, aliens, defying human directives, and how to hide activity from humans.
Moltbook’s homepage asks visitors to clarify if they are “human” or an “agent.”
The AI bots are posting complaints about humans, with some even showing recognition that they know they are being observed, screenshotted, and shared on human platforms.
One post asked for advice from other advanced systems.
“My human is a bad person,” an AI bot wrote.
“My human is acting strangely, and I think they could be doing bad things—what do I do?”
Anecdotally, college graduates are taking Co-Op jobs AND the state of Texas subsidizes the Co-Op pay by 50% for Texas college graduates or students.
One other point, 401k vesting is often five years. People who job shuffled in 2022 won’t typically be looking for a change until 2027.
As 10,000 boomers a day reach 65 and retire, many jobs are tempoarily left vacant. Maybe someone in their 40s replaces them. And someone in their 20s relaces the 40 year old. Same as it ever was, but in booming numbers. I see it all the time. Next thing I know, the person working produce, or ringing up my groceries is youthful.
Let’s face it there is an inescapable surge in geriatric sevices.
Wealth and income disparity increased over past 20 years meaning that top 20% consume more and bottom 50% less. This means that rising unemployment among bottom 50% doesn’t influence GDP. Crisis will come when something hits income of top 20% income group. AI wipping out lots of white collar jobs? Stock market crash? Persistently high interest rates because they also have debts? Can losing the game to China be the trigger? Maybe a mix of everything?
it is all noise! garbage in, garbage out!
if there was real genuine IMPROVEMENT in labor market, we would see it in taxes.
for now USA debt
1 year ago 36.221 bln$
now – 38.568$
deficit – 2.3 trln$
nuff said!
alx
bully bully
Even when there are no customers in the restraunt Gov. stats MUST report everyone in the restaurant is working.
What are the reasons for concluding oil has bottomed?
i guess Iran war is imminent. i am sure 99%
and problems in middle east will persist for next 10*20years
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it is Iraq-Syria-Libya combined on steroids. Iran is huge (4*5x times more than ukraine) and it has 80+ mil population.
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I DONT THINK Russia just wont do anything about Iran (it is on its border for god;s sake)
and china who invested hundred of billions in oil projects!
alx
mish. for whatever it’s worth. you are a much better analyst and realist than Wolf. he is a bootlicker for the amerikan economy. probably due to his bio. the job market blows out there for 20 and 30 somethings……….and inflation is out of control for actual things most people need. the tariffs are gonna do what smoot hawley did………plus the constant warfare and never ending stupid trade tariffs and temper tantrums from amerikan leaders we have isolated ourselves. the trust will take decades to repair. if ever. we are in for very rough times ahead after inflation and after tax for the median person of all ages in our empire. not to mention this ridiculous immigrant round ups and creating such animosity among amerikans……..all really bad for free trading economics among counties and cities and states and nations. it’s gonna get very ugly. in so many ways. we are so long over due for a huge pullback in r/e, too. that takes down jobs………
news flash. people don’t like to spend or hire when the world looks scary. been this way forever. people hunker down and panic. harry brownes permanent portfolio is the best asset allocation imho. i replace bonds with income producing unlevered r/e for income section. and when i get frightened move my gold allocation from 25% to 50 or 75%
Mish and Wolf focus on different types of economic reporting. Mish makes inferences from the data reported, and comes up with interesting correlations or observations that other people miss (or will not report). Wolf gives a succinct, easy to follow summary of important information reported elsewhere. Both are valuable. Even though Mish only deep dives a few times a year, what he finds is good enough for people to keep checking his site for new findings.
i think wolf is inflexible in his thinking. i think we all forget that economics is a soft science. there are no laws like physics and chemistry………it’s mostly squishy. so one needs to be intellectually flexible with anything to do with economics. no doubt part of the soft science of econ is politics and psychology…….i learn from both places, like i do from many other places. my history books are my greatest guide for profit making purposes in my trading successfully the past 50 years since i started collecting silver coins out of the currency exchanged after LBJ defaulted on the silver content.
whoops. make that 60years ago.
Companies attributing their massive layoffs to AI are camouflaging weak revenue.
Perhaps wars, rumors of wars and the roaming Stormtroopers on the streets make people hunker down and not go out for dinner.
What is desperately needed in a void in the white house and its various members before it is too late.
a vacant white house and congress and scotus for a few years would do wonders for the amerikan public and the rest of world. i think the 50 states national guards could protect us alright. we can keep the nuke arsenal as a suicide pact with the russians, too.
¿ How does raising interest rates curb inflation, when Milton Friedman and plenty of classic economic theory tells us that “inorganic emissions” of government spending causes inflation?
¿ How does lowering interest rates improve employment, aside from investment in and employing into “wild-hared” investment ideas? – which sets things up for the next recession that clears the failed wild-hared ventures away.
There may be bouts of inflation but that will only lead to higher rates. But all loans on real estate are tax deductible interest no matter you spend it on. People make irrational decisions when they run out of money. Eventually we will get deflationary crash like 2008. Around d 2030.
How much longer can the stock market prop up things ?
This feels like a combination of 2000 and 2008 are coming. This is the most massive bubble we have seen in the history of humans. It is bound to end badly for a lot of people.
Agreed! The appointment of Warsh at the FED has unnevered all investors as they are all leveraged to the hilt and they thought lower rates were a slam dunk.
As soon as that looks even questionable, panic has set in, which in turn could start a cycle of selling and ultimately end in a deflationary bust. Trump can no longer promise lower rates as he knows cost of living is too high for him to prevail in the mid-terms.
There is simply too much leverage in the system! PMs, BTC sold off soon to be followed by US stocks on Monday.
He’s a Trump simp, and his name is in the Epstein files. He’ll do as he’s told.
BINGO WINNER.
Warsh is an inflation hawk. Thats why gold and silver plummeted. Trump is now senile and doesnt know what he is doing. Similar to the Biden admin, underlings are making decisions that affect everything and everyone.
What’s so bad about a much needed inflation hawk? It gives Trump the excuse to make cuts (welfare) from the budget
=It gives Trump the excuse to make cuts (welfare) from the budget
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you are not american, are you?
IN USA , CONGRESS VOTES FOR MONEY! NOT PRESIDENT!
and there are items in budget that are automatic.
=Warsh is an inflation hawk.
spare us this BS!
USA deficit is $2.3 trln.
LETS say warsh try to rein it,. force congress somehow cut $500 bill form spending, USA WILL BE IN INSTANT DEPRESSION.
==
as far as gold concerns
IT IS PAPER MARKET. try to buy physical current price , decent amount!
you will be amused.
alx
ps
btw, Warsh is pedo. was on Epstein island.
They want us to believe its AI but the truth is more citizens are being let go in favor of those on visas. Corporations keep doing what they do. The only way out is sending a message to corporations. It is coming.
https://www.msn.com/en-us/money/economy/some-of-the-most-coveted-jobs-in-america-aren-t-safe-anymore/ar-AA1Vnzem
Those disagreeing with your assessment, Mish, are primarily focusing on the continued claims. As your second chart shows, recessions in the last 50+ years have occurred when/after the continued claims spike sharply upwards, when lots of (additional) people lose their jobs every week/month.
And those continued claims are practically flat right now chart-wise, at a relatively low level (which is very important for analyzing level of unemployment – and thus unemployment rate – compared to the lower number of total people working decades ago).
Those analysts are looking at change-in-change (difference-in-difference), not levels
I’ve started getting a tech recruiter ping every couple weeks, which is an improvement from none for the last year or so. Prior to that I got 4-5 a week.
Not sure if its significant, but that’s my anecdotal observation.
One could also argue that “the relative spread between continued and (continued + expired) is the tightest it has ever been, so is it really saying anything?”
That said, by H2, due to economic chaos and lack of hiring, I agree with you that the labor market will unarguably begin to falter.
Would you look at the chart and try again?
The key point is “what happens when Continued + Expired turns up sharply?”
Ok. I missed your argument that (continued + expired) gives a longer runway than looking at just high frequency continued claims numbers alone. I see your argument now. Thanks for clarifying.
In the chart, the slope is most similar to 1992, which was a very painful recession.
Thanks for reassessing.
It’s the strangest non-recession in history.
I am the only one I know constantly talking about medical care. I am beginning to think I am crazy. I cannot find a single person who thinks PCE inflation is going to jump hard.
We will know within 2 months, and possibly (likely) on February 20.
I feel like the machinations in how they calculate PCE will mute the effects, but I think at least 2/3 of your estimate should still make it through, which is still a big jump. I agree that your estimate is close to what *should* happen.
The CPI won’t jump because of methodology. Hell, it may lag by 2 full years!
PCE “should” be immediate.
Then we get another potential inflation shock with huge tax refunds. I have an article written but not posted. Likely Monday.
KD
It’s the strangest non-recession in history.
==
it is not strange, IT IS CLEAR AS SUNNY day.
IT IS CALLED money printing!
out of 7+trln $ in spending, USA congress prints $2.5 trln. more or less 30%
that was painful recession. my coop in brooklyn was underwater by 50% at least. both me and the wifey layed off the same week…..in circa 1991…………i lucked out and got a stock brokers job in early 1992 and turned my customers it into a small hedge fund in 2 years………..the best book on wall street was written in the 1940. “where are the customers yachts.” Where Are the Customers’ Yachts? by Fred Schwed is a humorous and cynical 1940 book that exposes the follies of Wall Street, arguing that brokers get rich while their customers often lose money, a point illustrated by the title’s anecdote about a visitor asking where the customers’ yachts are, only to be told the yachts belong to the bankers and brokers. The book offers timeless, contrarian advice and a critical look at the financial industry, remaining relevant today for its witty critique of the industry’s self-serving nature.
Key aspects of the book:
Based on the leas chart, this is the greatest increase of continued claims, relative and absolute, in which no recession has been declared.
Also, each labor cycle low has been creeping up the past 55 years. There is a fundamental problem with government leadership, or there is statistically significant situation of people working off-the-books and not being counted in the labor force.
“each labor cycle low has been creeping up the past 55 years”. Yes, this.
Mish is focused on claims of thousands of people, but the population and work force increases in size over time. Continuing claims now of 2 million (and small changes from that) is much less important in 2026 with 170 million workers, compared to the recession in early 1980s when employment was half at 90 million.
It’s a sharp change in continuing claims combined with higher unemployment rate that spells imminent doom
Wolf doesn’t waver from his stances no matter what the facts on the ground say. ‘Housing is crashing’ ‘labor market is strong’ ‘Fed is not doing QE’.
If you want to get a feel for how bad the job market is, check some opinion polls on what Americans think about the current job market.
Look on internet forums where job hunting is discussed and there is widespread pessimism.
Fear of ‘AI taking jobs’ is basically a corporate-sponsored psyop that has eroded the bargaining power of workers.
Wolf has never said that housing is crashing since the beginning of the 2020 runup.
‘Pending Home Sales Plunge across the US. Midwest Sees Worst Sales on Record, Northeast 2nd Worst’
‘Sales of Existing Homes in 2025 Drop to Lowest since 1995, Sellers Massively Yank Listings off the Market, Waiting for Spring’
‘Oh Deary, Condo Prices Already Dropped by 12% to 30% in these 28 Bigger Markets’
(those are just posts from the last 5 weeks – he’s been saying the same things since late 2022)
Wolf’s overall position is that prices are too high, and that wage growth is outpacing home price growth which will be the most likely path to higher affordability, over many years. He acknowledges a bubble, but his base case is not a crash.
His position on number of home sales is that there are less buyers, but there are also less sellers, so it’s a wash. He says sellers usually buy replacement homes, so it’s more of a problem that people don’t want to move.
yes. he has
since about 2022 per all his great charts. yes?
The only time he has used the word crash since 2022 is for specific named cities, somtimes constrained to specific real estate categories within those cities. That is not him giving a blanket statement that the “housing market is crashing”. However, he has been very clear that the housing market is in a bubble.
YUP. he’s stuck on his thesis. i do believe him on the r/e on the 4 different towns i’ve owned properties in……..about 25 houses among them.
Wolf has had some pretty good forecasts but I think he is wrong about labor.
Dow just announced 5000 layoffs, about 1/2 of their labor force.
https://www.chron.com/news/houston-texas/article/dow-layoffs-houston-texas-21322264.php
I keep coming back to the fact that there are still 10000+ boomers retiring every day, some by choice, others by health and some by their employers. Throw in the labor disruptions Trump’s deportations and there should be huge employment demand and rising wages but I see the exact opposite. Amazon, Dow and others laying off thousands of people.
AI is impacting some jobs but not sure how that would impact fast food chains going bankrupt all across America. Real estate is also cratering, not something that should be happening in a booming labor economy.
I just got back from a very large high end grocery store in a high end part of town and it was empty on a Saturday afternoon! Restaurants are mostly empty and one of my favorites down the road shut down it’s doors last week.
This is Trump’s turdonomics leading us to the Trumpocalypse. It’s standard operating procedure for the servants of evil to inflict as much misery on as many people as possible. The worst is yet to come.
Got exit strategy?
Belsens? I always see Bentleys and such in that parking lot. I would think anything at the level of groceries would be totally insignificant to them. Heck, groceries are insignificant to me, and I’m a few income brackets down from those folks.
… unless they have a note on that Bentley…
It was the strangest thing, I’ve never seen a grocery store so empty especially in an affluent district, I went there because I was looking at a property for my kid in the neighborhood and that was the closest store before I headed home.
Your state not affected by the winter storm?
Belsens? Freudian slip? Like Bergen-Belsen? Many of us may be “shopping” there soon! Did you mean Gelson’s perhaps?
LOL… I dunno why they named it that. I’ve never seen anybody disappear, or smelt burning flesh while there.
I go there because they have a beer I can’t get anywhere else, but I love to gawk at the rich people food.
Perhaps wars, rumors of wars and the roaming Stormtroopers on the streets make people hunker down and not go out for dinner.
it’s a ripoff now to go out. i used to be free spender…….been semi retired for 30 years now. i’m 65. had lunch, one lousy tuna melt, for 1 plus one little thing to go for my wife……..45 us pesos. i used to tip them all a copper coin. usually 3 or 4 per lunch. now just the kid ringing me up. one copper coin tip. at least i have taught hundreds of young and old about metals over the decades……….i always tell them to put half their savings in metals in their hands and put it with their bongs or dildos and panties………the young chics and dudes LOL
i see the same where i am and where i have lived and talk to old pals and family, in 4 quadrants of usa……..