Quiver Quantitative - The U.S. job market remains resilient, as evidenced by the latest data showing only a slight increase in weekly jobless claims. This modest rise, from 203,000 to a seasonally adjusted 205,000 in the week ending December 16, aligns with economists' expectations and reflects the ongoing strength of the labor market. This stability is seen as a key factor in averting a recession next year. The labor market's robustness is further highlighted by December's consumer confidence survey, where the perception of job availability reached a five-month high.
The jobless claims data also coincided with the period surveyed for December's nonfarm payroll report. A comparison between the November and December survey periods indicates a slight decline in claims, supporting the notion of a solid labor market. Despite November's job growth of 199,000 being lower than the year's average, it still represented an improvement from October's figures. This data is crucial as it arrives just after the Federal Reserve's decision to maintain interest rates, signaling a pause in its aggressive monetary policy tightening.
Market Overview: -Initial jobless claims rise slightly above expectations, but remain within healthy range. -Consumers feeling increasingly optimistic about jobs, suggesting labor market resilience. -Third-quarter GDP revised down but still robust, defying recession fears. -Momentum expected to slow in Q4, with trade deficit and inventory concerns emerging. -Overall, the economy continues to expand, though headwinds are building for 2024.
Key Points: -Jobless claims data, while volatile around holidays, point to ongoing labor market strength. -Consumer sentiment towards jobs improves, boosting confidence in economic resilience. -Upward revision of continuing claims attributed to post-pandemic data adjustments. -GDP growth revised down but remains well above the Fed's non-inflationary rate. -Trade deficit and slower inventory accumulation likely to dampen Q4 growth.
Looking Ahead: -Continuing claims data next week will provide further insights into December's hiring t-trends. -Monitoring consumer spending, trade, and inventory data for signs of broader economic deceleration. -The Fed's future rate path will hinge on the balance between inflation and potential growth slowdown.
Meanwhile, continuing claims, a measure of sustained joblessness, have shown a marginal decrease, falling to 1.865 million. This slight drop, alongside the stable initial jobless claims, offers a positive outlook on employment trends for December. However, continuing claims have seen a general upward trend since mid-September, attributed to seasonal adjustment challenges post-COVID-19. Economists anticipate a more accurate representation of the labor market with upcoming data revisions.
On the economic growth front, the U.S. economy's third-quarter performance was robust, albeit slightly below initial estimates. GDP growth for the quarter was revised to a 4.9% annual rate, marginally lower than the initially reported 5.2%. This growth, predominantly driven by consumer spending, remains significantly above the Fed's estimated non-inflationary growth rate. While the fourth quarter may see a slowdown due to reduced consumer spending and other factors, forecasts still suggest sufficient growth to prevent a recession.
This article was originally published on Quiver Quantitative