Applications for unemployment benefits in the US surged by 44,000 last week, reaching a total of 236,000 for the week ending December 6, making it the largest single-week jump since during the COVID-19 global pandemic in March 2020.
The week before that had already recorded the lowest claims figure in more than three years, thanks to the Thanksgiving holiday slowdown and the government shutdown.
The number caught almost every economist off guard, beating all but one estimate from Bloomberg’s survey.
PepsiCo, HP cut jobs as unemployment numbers stay choppy
Major employers like PepsiCo and HP recently confirmed plans to reduce staff, and October saw the highest layoff count since early 2023. Pantheon Macroeconomics predicts that layoffs are only getting worse.
Meanwhile, High Frequency Economics pushed back against that claim, saying the number still looks low compared to long-term trends.
Heather Long, chief economist at Navy Federal Credit Union, called for caution. “Don’t read too much into the jump in jobless claims,” Heather said. “Smoothing it out, this still looks like an economy averaging 215,000 to 220,000 new jobless claims a week. That’s not a cause for concern.”
And she’s got a point. The four-week moving average rose just slightly to 216,750, showing how much this week’s number may just be holiday noise. But it also means the broader trend is inching higher.
States drive unadjusted spike, Powell warns of labor risk
On a raw, unadjusted basis, initial claims spiked by almost 115,000, the most since March 2020. That surge came from California, Illinois, New York, and Texas, some of the most populated states in the country.
These aren’t edge cases. These are job markets that matter.
At the same time, Cryptopolitan reported yesterday that the Federal Reserve cut rates for the third straight meeting. Jerome Powell, speaking after the decision, said the labor market is going through a “gradual cooldown,” but warned that it faces “significant downside risks.”
Despite that warning, Fed officials didn’t revise their unemployment forecast upward for next year compared to September’s projection.
Meanwhile, data for continuing claims (a stand-in for people still getting benefits) dropped to 1.84 million during Thanksgiving week, the biggest single-week fall in four years. The back-and-forth across these metrics makes it hard to read any solid trend right now.
On the consumer side, the University of Michigan’s early December survey showed more than half of Americans expect unemployment to rise in the next year. Sentiment is shaky. Households are watching the job market closely.
Also dropped on Thursday: the US trade deficit narrowed in September to its lowest level since mid-2020, thanks to a surprise pop in exports. That’s not related to unemployment directly, but it paints a picture of a slowing but still-active economy.
Outside the US, markets are heading in a different direction. George Saravelos, global head of FX research at Deutsche Bank, wrote in a note that “something’s cooking.” He pointed to rising rate expectations in economies like Australia, where the Reserve Bank might hike in February after holding steady this month at 3.6%.
Korea, Sweden, and Japan are also seeing their 10-year yields fall, unlike the US, where Treasury yields are flat.
George said there’s one thing linking all of them: “Fiscal policy is easy, house prices are starting to accelerate again, and central banks are not willing to accept any more currency weakness. Put simply, global reflation is back.”
The smartest crypto minds already read our newsletter. Want in? Join them.
