Initial claims unexpectedly spiked to 231,000.
As charts go. That’s rather boring.
OK, claims unexpectedly jumped to 231,000 vs a Bloomberg Econoday consensus of 212,000. But 231,000 is a routine number.
The reaction, not the headline number, is much more important.
The Wall Street Journal comments Stock Market Today: Jobs Data Collides With Tech Selloff, Nasdaq Falls
Bitcoin sinks, AI spending weighs on Alphabet and investors weigh signs of labor-market weakness.
Q: Is that headline even correct?
A: I don’t know and nobody else does either.
However, I do stand by bonds. Weakening jobs is definitely good for bonds.
Bond Market Reaction
- 5-Year Yield Down 8 Basis Points to 3.75 Percent
- 10-Year Yield Down 7 Basis Points to 4.21 Percent
- 30-Year Long Bond Yield Down 6 Basis Points to 4.86 Percent
Continued Claims Continue Downtrend
Initial unemployment claims become continued claims after one week. But numbers can drop if more people find work than go unemployed.
Q: Is that what is happening?
A: No!
Continued claims also drop if people expire all of their unemployment benefits. And that is what’s happening.
Continued Claims, 15+ and 27+ Weeks Unemployed
Continued claims have essentially flatlined. That is very misleading because the unemployed are rapidly exhausting benefits.
Continued Claims and 27+ Weeks Unemployed Details Analysis
- Continued Claims Monthly Average: 1.85 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.
What’s Happening Synopsis
Initial claims have been reasonably steady. But once out of a job, it is very difficult for a person to find one.
History suggests that once someone hit 15 weeks unemployment, they are stuck and will eventually get to 27 weeks and fall off claims.
In 12 states, people lose their unemployment benefits at a maximum of 21 weeks. So, my chart understates the problem.
Anyone claiming a reasonable or strong jobs market based off continued claims does not understand what’s going on.
What we don’t know is whether that jump in initial claims is the start of a strengthening trend. If, so, things will get very nasty quickly.
Final Thoughts
Despite the modest improvement in bond yields, the bond market seems torn between inflation and disinflation.
Yields remain at near the upper ends of their range. Jobs are very supportive of falling yields, but deficits, health care, the dollar, and tax cuts are not.
We do not know if this setup resolves in stagflation or disinflation. That is the nature of what I have been discussing for months.
For further discussion, click on some of the links below.
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.
A plunge in the US dollar makes imports more expensive. That is on top of tariff already destroying many businesses.
February 2, 2026: The Fed Has Two Huge Problems Starting Now, Acyclical Inflation and Jobs
The Fed is not in a good spot.
February 4, 2026: Will a Sugar High of Huge Tax Refunds in April Stoke Inflation?
The Tax Foundation estimates refunds will be $748 more per household, on average, compared to last year.
February 4, 2026: ADP Payrolls Weak Again, Small Employers with 20-49 Employees Hit Hard
Witness the destruction of businesses with 20-49 employees.
February 4, 2026: Manufacturing Recovery? ADP Says Manufacturing Jobs Down 22 Straight Months
There is no manufacturing recovery.
Peter Schiff, and I am not a BIG fan, said last night in a podcast: [so many words] “Trump leveled with the US People – – bad economy – – and then started lying openly.”
You would have to be a dufus to NOT see PRICE INFLATION SPIRALING and TARIFFs being but one cause – – and an ignorant slut if you buy this shit from that asshole. I thought that Biden was a BIGGER ASSHOLE though, but he was fading fast.
Apparently, the trump lack of economic plan is going well.
None of this should come as a surprise since many companies announced layoffs last year and officially kept employees on the payroll until this year. Those in their lame duck transition, cut back spending, so more companies announced layoffs this year.
The descent in price of PAYX and ADP suggests to me anticipation of worsening unemployment.
Since Paul Volker headed the Fed, the only response to any real problem like covid or the Great Recession or perceived problem like Y2K has been to throw money at it and lower interest rates. I fully expect the same repair prescription this time around and therefore massive yield curve control and lower short-term rates and stagflation. Also I expect the vote buying congress to add to the ‘compassionate’ cash rush.
We had an economically stimulative deficit of around $1.8 trillion and GDP growth less than a trillion suggesting throwing money at problems has run its course, another point for stagflation.
Just as prices can go up without inflation (supply shortages), they can go down without deflation (supply excesses). We may well see prices go down due to sellers needing to unload inventory for cash flow or other needs, but money supply is not likely to contract.
Quoting Mish: “The definition I adhere to is: Inflation is a net expansion of money supply and credit, where credit is marked to market. Deflation is the opposite: a net contraction of money supply and credit, where credit is marked to market.” The definition does not have anything about prices because prices can and do change with inflation or deflation, but prices can change for many other reasons. Rising prices might signal inflation, but they may well be signaling something else. Listen or read news and virtually every article assumes, sometimes wrongly, rising prices are equivalent to inflation.
Definition from: What Is Inflation and How Does One Measure It? – MishTalk
The stock market sold off across the board, bitcoin clobbered, metals not that much better off either. The surprising thing this week is that TACO didn’t open his mouth to cause the sell off. no new tariffs, war plans, or other things to trigger this so that begs the question, what happens when he does open his mouth?
Markets have 40% drop from here to normalize, will it happen soon even with Fed intervention?
Got Puts?
You remember Paul Volker differently than I do.
TOO LATE TO BUY PUTS. Put buying here makes them more expensive. ONE MUST BUY PUTS are BIG TARGET AREAS using Measured Moves. It is quite easy. I spent years Teaching other retired guys around the world about Measured Moves, Price action, Candlestick formations, and ENTRY candle indicators (Such as GAPS). For those here how never have taken a simple CANDLESTICK reading course, it is worth your time. I ONLY SELL OPTIONS for the record here, so at big target areas (HIGHS) I sell calls and I sell puts at primary SUPPORT LEVELS. I collect premium and only ROLL near-ITM calls or puts.
Volker lowered rates?
I think Dave Smith meant, “After Paul Volker headed the Fed….”
Nevertheless, great comment by him.
Thanks for clarifying my thoughts.
I follow Mish, too and other more UN-embarrassing smart people.
We’re coming to another one of those times where everyone that isn’t a billionaire loses their shirts, and everybody that is a billionaire takes the shirts and rents them back.
In the case of Homes, The Republicans lines up FREE SALES of FORECLOSED HOMES to Larry Fink (“rate fink”) so they could then rent them back to PO’ FOLK!
The UK seems poised to remove its Prime Minister for appointing a man with known connections to Jeffrey Epstein to be ambassador to the US. The Prime Minister himself has no connections to Epstein, it’s his judgement that’s being questioned. Meanwhile, over here in Amerika, none of the scum that committed these crimes will ever be held to account, including the president. How far this country has fallen.
My hope from the Evangelicals and Christian Nationals fading fast. Turns out being a pedophile isn’t a problem. Is anything?
The Prime Minister has connections to Jimmy Savile. The ultimate goal is of course blackmail.
Don’t hold your breath, sadly !!!!
Integrity is in short supply in Westminster.
Unfortunately, they can do nothing about the Duke of York.
Even TRUMPIE has been suddenly VERY quiet about his girlie rapes at the Island. He is a pedo, too. THE SCUM are running things here.
Even after mass deportations, Americans still can’t find jobs. WOW. Do deportees take their jobs with them?
“Do deportees take their jobs with them?”
Yes they do, not the actual job but all the supporting jobs because an immigrant needs a home, car, utilities, food, clothing, etc. and once he/she is gone then all of those things take a hit.
Then the cost of labor goes up so if you need a plumber, landscaper, etc you pay more and have less money to spend on home, car, utilities, food, clothing, etc. It’s a vicious death spiral just like the demographic death spiral.
Correct
It’s similar to keeping a camp fire going. You start yanking out logs and the fire goes out.
And you burn yourself.
For an administration that wants to rebuild industry in the US, mass deportation of workers? Sheeesh.
Every year over the past three decades, immigrants have paid more in taxes than they received in benefits The Cato Institute
https://www.cato.org/white-paper/immigrants-recent-effects-government-budgets-1994-2023#
Now now it’s been like that forever…don’t exaggerate….
They also take the burden on low end housing, schools, public infrastructure, social safety net programs and medical services etc. with them. I am not convinced the balance favors keeping illegals in the country, especially since the deportations are currently lower now than during Clinton, Bush 43, and Obama administrations and I did not hear of deleterious effects then. That said, I abhor the tactics this administration is using and the obviously excessive numbers inappropriately arrested as they supposedly get the worst of the worst deported. It is long past time for accountability.
“I am not convinced the balance favors keeping illegals in the country, especially since the deportations are currently lower now than during Clinton, Bush 43, and Obama administrations and I did not hear of deleterious effects then.”
What was the population under Clinton and Bush? What was the labor participation rate during those years and what is it now?
https://fred.stlouisfed.org/series/CIVPART/
How often do you review the chart above? How often do you review the social security snapshot portal? What about the medicare CMS database? Have you asked AI to extrapolate the health patterns and cost into the future? Have you modified your investment portfolio based on any extrapolations yet with or without AI?
What data/scientific methods/economic methods have you used to extrapolate the future and determine the economic usefulness of immigrants?
Or is all your “gut” wisdom about “I am not convinced” all you got?
If you have data to share, by all means, enlighten me and the rest of us here. There is AI, there is google and a ton of other resources yet the bigots and racists never can formulate any data based observation here just “polls” that say “everyone” wants immigrants out. Gee wonder why democrats are winning in deep red counties lately if that’s true.
Well here’s a shortcut to you doing any work, the answer is simple.
Answer = Got exit strategy?
The previous administrations figures were mostly those turned away near or at the border. Now many working long term residents? are being forcibly returned. Also it is now quiet at the borders as the stepping line across the borders results in harsh throwbacks.
I remember when a guy would come home from work on a Friday, put on his Bermuda shorts but keep on the long knee socks, wingtips and wifebeater shirt, and cut his own lawn with a push reel mower, then have a PBR. Somewhere along the line a weekly Panzer Division lawn crew became required to replace that routine.
If you go to google.com/trends and search for unemployment-related keywords, you will see the trends are breaking out, and in some states, those searches are up by 300 percent in the last few weeks. It’s going to be bad.
Everything is down today, especially Bitcoin. Looks like the bottom has fallen out.
Honorable mention goes to $Trump meme coin. Down 13% today to an all time low of $3.60.
More bribes will come… making it spike briefly, which will also be insider traded.
Things are looking up… AI can now hire human meatwads to do tasks.
https://futurism.com/artificial-intelligence/ai-rent-human-bodies
The social security snapshot for January 2026 is out. 75m socialist on the dole and growing. Monthly cost of $136 billion / month and growing.
If you don’t see or feel that noose tightening, it’s time to wake up.
Got exit strategy?
Exit? I’m planning on being a rentable meatwad!
Truly, the Shining Dream of All Americans.
I, for one, welcome our new AI overlords!
It just gets better and better.
The 1982 to 2026 13/33 year :: x/2.5x 1st and 2nd fractal … 33 year Second Fractal Crash is on …
Bitcoin’s proxy equity ETF GBTC peaked in Oct 2025 on the 83 month (2x) of an Aug 2015 41/83 month :: x/2x fractal series. It is now in the second fractal 2-2.5x nonlinearity window. Lower low opening gaps can be seen recently on a daily basis with GBTC having today lost 10.5% of its valuation as of 1400 EST. Since October 2025 Bitcoin’s market cap has dropped from 2.45 trillion to 1.35 trillion.
Growth for the 1982 SPX peaked 28 Jan 2026 in the 2.5x or 33th year of the 13/33 year :: x/2.5x fractal series. The coming global composite equity nonlinearity will be dramatic.
As the real American economy goes with its 15 year highs on monthly lay-offs, so goes the deleveraging of the NFT canary in the coal mine, and the suffocation deleveraging of gold,silver, and equity valuations.