Job Losses In December A Strong Possibility

Negative Job Creation Is Coming

This current slowdown is nowhere near as bad as the one in March and April, but it is worth watching because the situation is unstable. The goal is to avoid too much weakness before the vaccines go out. We will start to see a recovery in February. That leaves us with at least 6 more weeks of economic weakness. 

We knew that there wouldn’t be a massive jump in initial unemployment claims this week, but some did see further weakness in the labor market. There might be outright job losses in the December BLS report.

Investment banks and economists are now agreeing with me because of this latest initial claims report. We are already closing in on getting a stimulus, but more might come after the news breaks that the economy lost jobs. After all, one of the catalysts for the current stimulus talks was the weak November BLS reading.

By the way, the Emerson polls show the GOP up 3% in each race. That puts the average of recent polls at Loeffler up 0.2% and Perdue up 1.2%. It’s looking less likely that the Dems will win both seats. The PredictIt betting market shows there is a 70% chance the GOP maintains the Senate and a 31% chance the Democrats win it. The election is in 17 days; the holidays are in between now and then, so most don’t anticipate any major turns in the races.

Another Weak Jobless Claims Report

The increase in claims last week was revised even higher as there were 862,000 claims which was 9,000 higher than the initial reading. This report was interesting because seasonally adjusted claims rose, but unadjusted claims fell. The consensus expected a decline to 806,000 seasonally adjusted claims because they thought last week had a backlog of data from the week of Thanksgiving.

They were very wrong as seasonally adjusted claims rose to 885,000 which was just 30,000 below the high end of the consensus range. Unadjusted claims fell. They were down from 956,000 to 935,000. That helps explain why the chart below shows a 1% increase in PUAs combined with unadjusted claims. 

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