A pre-holiday roundup of some of today’s economic news.
The headline story is clearly the drop in unemployment claims nationally. The U.S. Department of Labor reports claims fell to a 52-year low.
In the week ending November 20, the advance figure for seasonally adjusted initial claims was 199,000, a decrease of 71,000 from the previous week’s revised level. This is the lowest level for initial claims since November 15, 1969 when it was 197,000. The previous week’s level was revised up by 2,000 from 268,000 to 270,000. The 4-week moving average was 252,250, a decrease of 21,000 from the previous week’s revised average. This is the lowest level for this average since March 14, 2020 when it was 225,500. The previous week’s average was revised up by 500 from 272,750 to 273,250.
The advance seasonally adjusted insured unemployment rate was 1.5 percent for the week ending November 13, a decrease of 0.1 percentage point from the previous week’s revised rate.
Calculated Risk says that’s well below forecasts. The Associated Press reports there’s a seasonal adjustment wrinkle.
Jobless claims dropped by 71,000 to 199,000, the lowest since mid-November 1969. But seasonal adjustments around the Thanksgiving holiday contributed significantly to the bigger-than-expected drop. Unadjusted, claims actually ticked up by more than 18,000 to nearly 259,000.
An expert tells the Wall Street Journal the report reflects the labor shortage.
The decline, along with near-record levels of job openings, signals strengthening demand for labor, said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
Last week’s drop was calculated after adjusting for seasonal fluctuations. On an unadjusted basis, initial claims rose to 258,600, up more than 18,000 from the previous week. “Even if the data overstated improvement, the overall message is the same,” said Ms. Farooqi. “Workers are in short supply and demand remains strong. As a result, layoffs are falling.”
Next up, a tiny upward revision in Q3 GDP estimates. It was a slow quarter. The Bureau of Economic Analysis reports,
Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the third quarter of 2021 (table 1), according to the “second” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 6.7 percent.
The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.0 percent.
As noted above, growth slowed significantly in the third quarter, but it is expected to increase again in Q4.
Consumer spending – critical this holiday season – bounced back in October. The Wall Street Journal reports,
U.S. consumers ramped up spending in October, helping to power the broader economic recovery as businesses stepped up investment and jobless claims fell to historic lows in a tightening labor market.
Household spending rose 1.3% in October from a month earlier, while personal income increased 0.5% last month, the Commerce Department said Wednesday. Consumers are benefiting from a strong labor market.
From the Commerce Department release:
Personal income increased $93.4 billion (0.5 percent) in October according to estimates released today by the Bureau of Economic Analysis (tables 3 and 5). Disposable personal income (DPI) increased $63.0 billion (0.3 percent) and personal consumption expenditures (PCE) increased $214.3 billion (1.3 percent).
Real DPI decreased 0.3 percent in October and Real PCE increased 0.7 percent; goods increased 1.0 percent and services increased 0.5 percent (tables 5 and 7). The PCE price index increased 0.6 percent. Excluding food and energy, the PCE price index increased 0.4 percent (table 9).
Prices also increased, as the AP points out.
U.S. consumer spending rebounded in October, rising by a a solid 1.3%, but inflation remains elevated, rising over the past year at the fastest pace in more than three decades.
The jump in consumer spending last month was double the 0.6% gain in September, the Commerce Department reported Wednesday.
At the same time, consumer prices rose 5% compared with the same period last year, the fastest 12-month gain since the same stretch ending in November 1990.
A lot of the hoped-for fourth quarter recovery will depend on whether consumers continue to spend freely.
