This Is The Inflation Peak For Now

The improvement in the labor market has been put on autopilot. Initial jobless claims fell for the 6th straight time in the week of June 5th. They fell from 385,000 to 376,000 which was 7,000 above the consensus. The 4 week average fell sharply to 402,500. It’s inching closer to our target of below 300,000 by the end of the year. Each week, we get more confident in our prediction. Non-seasonally adjusted claims fell by much more. They were down from 425,000 to 367,000. PUAs fell 2,000 to 71,000.

Last week, we predicted that continued claims would fall sharply in the next report. We were correct. In the week of May 29th, continuing claims fell from 3.757 million to 3.499 million which is a new cycle low. In the week of May 22nd, total people on all benefits programs fell from 95,000 to 15.35 million. This total is going to fall dramatically this summer. There are 6.35 million people on PUA, 5.23 million on PUEC, and 197,000 people on extended benefits programs.

As you can see from the chart above, the first swath of pandemic benefits will be expiring in the next report. It will increase to 2.96 million by July 10th. Of course, it’s possible some people leave benefits a week or two before they end because they anticipate the change.

The chart below shows 23.4% of benefits will expire in June. Then 5.9% will expire in July. There will be a weird window of a few weeks where some of the country has extra benefits and other parts don’t. The hope is that doesn’t make much of a difference because the labor market will be significantly stronger by August.

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Disclaimer: The content in this article is for general informational and entertainment purposes only and should not be construed as financial advice. You agree that any decision you make will be ...

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