If You Lose a Job, It’s Getting Harder to Find a New One

The number of initial and continued unemployment claims is low, but continued claims are on the rise. It’s another indicator of the softening labor market.

Initial Claims

• In the week ending December 2, the advance figure for seasonally adjusted initial claims was 220,000, an increase of 1,000 from the previous week’s revised level.
• The previous week’s level was revised up by 1,000 from 218,000 to 219,000.
• The 4-week moving average was 220,750, an increase of 500 from the previous week’s revised average.

Continued Claims

• Continued claims lag initial claims by a week.
• In the week ending November 25, the advance figure for seasonally adjusted continued claims was 1,861000, a decrease of 64,000. Unadjusted claims rose by 294,000.
• The 4-week moving average rose by 7,000.

I use monthly averages because the weekly numbers fluctuate wildly at times. Also, monthly averages makes it easier to include recession bars on my charts.

Harder to Find a New Job

The long-term chart shows continued claims are still historically low. But they have ticked up strongly since the 2022-09 bottom.

Expect the Opposite of the Covid Recession

As I have commented many times, I do not think unemployment is poised to soar.

The Covid recession was extremely short but exceptionally strong. This rates to be the opposite, long and shallow.

Retiring boomers will take away some of the expected rise in unemployment. And since many companies struggled mightily to find and keep workers, they will be reluctant to do big layoffs other then in struggling technology companies.

Instead, expect to see falling hours. And some people who were holding two jobs might only lose one of them. They will remain employed even if they only work 10 hours a week.

A Big Decline in Quits Suggests the Labor Market is Back to Normal

Quits are hard data and provide a better measure of the labor market than openings.

On December 5, I commented A Big Decline in Quits Suggests the Labor Market is Back to Normal

Quits Synopsis

• Job quits are hard data. Quits represent actions taken by people, unlike openings that might not even be real.
• Quits may be due to retirement or people job hopping in response to a better offer elsewhere.
• Except for Education and Health Services, the numbers of quits are back in ranges that existed pre-pandemic. This represents solid evidence the labor market has stabilized and returned to normal or near-normal.

The Jobs Boom Is Clearly Behind Us, So What’s Ahead?

Yesterday, I noted The Jobs Boom Is Clearly Behind Us, So What’s Ahead?

Labor markets are clearly weakening in both ADP and BLS payroll reports. A measure of Quits says the same thing.

Today we can add evidence form continued claims.

What Does This Picture Mean for the Fed?

Assume that my base picture is at least in the ballpark.

Factor in Biden’s massive inflationary policies (tariffs, regulations, energy push) that will add to inflation. The Fed will not say that, but it does have to deal with it.

Huge union wage hikes and rising state minimum wages add to inflation pressures.

Out of fear of stoking inflation, the Fed will not cut as fast as the market expects unless banks implode over commercial real estate or something else (or I am totally wrong and the labor market collapses along with a collapse in inflation).

This picture still implies higher for longer resulting in a prolonged period of low growth if any growth at all.