Jobless claims are at their lowest level in 44 years
It’s not the actual level of jobless claims that matters. It’s the change from one year to the next, due to the income shock associated with job losses.
The Department of Labor reported that:
In the week ending February 25, the advance figure for seasonally adjusted initial claims was 223,000, a decrease of 19,000 from the previous week’s revised level. This is the lowest level for initial claims since March 31, 1973 when it was 222,000. The previous week’s level was revised down by 2,000 from 244,000 to 242,000. The 4-week moving average was 234,250, a decrease of 6,250 from the previous week’s revised average. This is the lowest level for this average since April 14, 1973 when it was 232,750. The previous week’s average was revised down by 500 from 241,000 to 240,500.
Why this matters: It’s not the actual level of jobless claims that matters most. It’s the change from one year to the next, due to the income shock associated with job losses. When initial jobless claims rise persistently, the lost income is a shock to the economy due to lost consumption. And these lost sales feed through into production and growth to eventually trigger recession.
Source: St. Louis Fed
Right now, the numbers are going in the opposite direction, which supports income and consumption and keeps the economy growing.