Initial jobless claims came in today at 500,000, which is a 12,000 increase from the previous week’s level, and substantially worse than the 475,000 expected by consensus.
What does this mean? Whereas before jobless claims were merely ‘stubbornly high’, and not declining meaningfully, now they’ve clearly gotten worse, as shown below in a chart from Waverly Advisors. What this means is that even if things start to get better, and jobless claims improve, it’s fair to say they will remain pretty ugly through year’s end.
We continue to anticipate overall unemployment levels to remain sticky near current levels into year-end as softening growth expectations weigh on corporate investment decisions. Anecdotal reports of demand for highly skilled labour appears to have a regional skew that may mute any near-term impact on national averages. Meanwhile it is obvious that job loss and creation will be a primary narrative focus for midterm elections. These converging factors suggest continued downward pressure on consumer sentiment for the foreseeable future.
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