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Unemployment Claims Remain Tame

Yesterday we got 1st time unemployment claims which came in at 219,000 which is relatively tame compared to a forecast of 224,000 BUT continuing claims came in at 1.91 million which is up from last week which was at 1.87 million. As I have mentioned I watch the employment numbers very closely–they are the ‘canary in the coal mine’ relative to the overall economy. It is tough to see the economy falling off a cliff if everyone that wants a job has a job.

Interest rates right now seem to be ‘stuck’–right at 4.60% (more or less). What is going to push rates higher–or lower? GDPNow from the Atlanta Fed is showing 3.1% as of 12/24/2024–if this is close it will be no help for lowering rates. Employment is not looking to be of much help for lower rates. The scariest thing from my perspective is we have no real idea on what government spending will be down the road (actually we all have opinions for sure)–are the bond vigilantes going to take over and ‘force’ discipline on the government? I don’t know the answer, but I am certain that there are some money folks out there that are licking their chops at the possibilities for making a killing in the debt market if something goes wrong.

Speaking of Bond Vigilantes here is a Pimco article from 12/9/2024.

JOLTs Report is Soft

The most important number of the day was the JOLTs (job openings and labor turnover) employment report showed softness is almost undoubtably here in the labor market. The softness was modest and in my mind supportive of a FOMC Fed Funds rate cut of 1/4%.

Employment is the most important piece of economic news (at least that is my opinion) –with strong employment recessions are held at bay and demand for goods and services remain high–so any softening starts to show cracks in the economy.

The JOLTs report for July shows that separations were up 336,000 with the largest layoffs in accommodations and food service which may show travel and dining out are softening.

The number of job openings at 7.7 million was about a million fewer openings than a year ago–actually a nice drift lower–Goldilocks?

So tomorrow we have ADP jobs and then on Friday the official government numbers of employment.

The 10 year treasury fell 3-4 basis points on release of the JOLTs numbers–now around 3.79%. Let’s see where this goes by the end of the week.

All the detail on JOLTs is here.

Food for Thought – Is a Soft Landing Coming?

I’ve attached a thought provoking article from Barrons – you should be able to read this article without a subscription.

The article explores inflation, consumer debt and the resiliency of the economy. Good food for thought.

Americans Have Quietly Deleveraged. It May Explain the Economy’s Resilience.