(Source: Momentum Global Investment Management)
21 April 2020
Record breaking US jobless claims
Source: Bloomberg & Momentum Global Investment Management
What this chart shows
Forgive us, this week’s chart isn’t the prettiest, but it reveals some of the most astounding data releases we have witnessed this year (in fact ever). This chart shows the weekly rate of initial jobless claims in the United States through time (in thousands). The figures track the number of people who have filed for unemployment benefits. Prior to this year the highest number of discrete weekly jobless claims ever recorded came in 1982 with 695,000 claims. In the four weeks to 10th April we have observed readings of 3.3 million, 6.9 million, 6.6 million and 5.2 million, leading to a cumulative 22 million claims. Given the number of data points included in the chart, which uses weekly data back to 1967, it isn’t possible to identify all the recent numbers clearly but we felt it was important to show as much data as possible to help frame the size of the moves we have seen over the past few weeks.
Why this chart is relevant
The number of jobless claims provides a good indication for the future path of unemployment figures and given recent data releases we should expect a significant uptick in US unemployment. Amazingly, the level of jobless claims observed in the past four weeks has erased almost all the jobs created since the financial crisis. Given that consumption forms around 70% of the US economy, a weaker consumer is clearly very damaging. Whilst it takes time for bad news to be reflected in economic growth and unemployment data, the weekly jobless claims help provide a better real-time sense of labour activity in the economy.