Rising jobless claims and sharp revisions paint a weaker picture than expected.
Transcript:
CAROLINE WOODS: And we know the Fed has a dual mandate. There’s the inflation side. But then there’s also the job side. And we did see this surprise jump in jobless claims on the back of weak job numbers. So where do you stand on the economy right now. Kind of balancing the mixed signals that we’re getting with inflation data basically in line PPI coming in cooler than expected. But then concerns about weakness in the jobs market.
BRIAN JACOBSEN: Yeah not only did we get the increase in the initial jobless claims those continuing claim numbers continue to trend higher. So it’s not just about people losing their job. And then very quickly finding another job. That duration of unemployment has been moving higher. It’s the highest that we’ve seen I think in about four or five years. So I think that the labor market is not in a great spot. But when we think about what was versus what is and what will come, right, a lot of the economic data, it tells us about what did happen, what was going on with the labor market, where we are now. I think that we’re sort of at this turning point when it comes to the job market. A lot of the uncertainty at the beginning of the year. Those clouds have lifted a little bit. And so maybe we will find that the labor market, after a few more weeks here of heightened initial jobless claims, perhaps then we can get a little firmer footing to see some type of rebound. But it is tentative right now and there’s the focus on what’s to come. But then there’s also the focus on what’s to come in terms of the data. If we see further revisions, because we did see the Labor Department just revise last year’s job growth sharply lower.
CAROLINE WOODS: So what does this tell us about the health of the US labor market. Kind of sum it up for us?
BRIAN JACOBSEN: Yeah, I think that really what it tells us, these big revisions, it’s that 2024 that it wasn’t quite as strong as we thought it was. Right? it wasn’t as on solid of a foundation. There were probably a lot more business closings, fewer business openings, especially during the springtime in 2024, culminating in a negative payroll print in August of last year. Already slight rebound in September and then another fairly deep negative number in October. We did see then a rebound coming out of the election, but then suddenly the economy was hit by the wave of uncertainty coming out of the Trump administration. So I think that the economy, maybe we are at the point where perhaps the worst is behind us in terms of the weakness and then the uncertainty with some of those clouds clearing related to taxes, tariffs, and rates policy by the Fed. Maybe that means that we can get a little bit more solid foundation. We do need to see the fruits of the one big, beautiful bill with all those incentives for research and development, investment in property, plant, and equipment. But that’s likely to play out over time. So I think maybe a little stability when it comes to the trade picture can go a long way to start rebuilding some of that confidence that was really chiseled away at earlier this year.
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