Jobless Claims Fall Sharply

Very Good Jobless Claims Report

The jobless claims report was very good which is a great sign because we’ve recently seen some weak data. Also, we need people to leave continuing claims before their benefits run out. Furthermore, this was the survey week for the BLS report. We haven’t seen a decline in COVID-19 cases and deaths recently which could slow the economy’s reopening. In fact, the Oxford Economics’ recovery tracker fell in the first week of September. It’s basically where it was 2 weeks prior.

We are painstakingly waiting for the COVID-19 tests from Abbott to be distributed to the governors. Abbott’s antigen test won’t be the only fast cheap test, but it will be the first which is why some are following it the closest. At the very least, these tests lower the chance of a 3rd wave. A real wave is the onslaught of new testing, vaccine results, and new treatments that are coming in the next few months. Abbott’s tests will be sent next to the states starting next week.

(Click on image to enlarge)

Seasonally adjusted initial claims fell from 893,000 to 860,000 which was 10,000 above estimates. Let's focus on the unadjusted data though. That number was even better as claims fell from 866,000 to 790,000 which was a new cycle low. This followed 2 weeks of increases. 

As you can see from the chart below, there was a major decline in unadjusted claims when including PUAs because PUAs also fell. They were down from 868,000 to 659,000. For the past 2 weeks we had been expecting PUAs to fall because the increase was mainly because of California which has said there’s a lot of fraud.

As you can see from the chart below, the decline in California finally came PUAs fell 236,000. Some economists say claims aren’t as bad as the numbers say (because of fraud), but it’s still terrible. They aren’t thinking like investors. If the labor market keeps improving, that's optimistic. You can’t expect the labor market to go back to normal overnight. 

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