A New Low in This Economic Indicator?
CAMS Weekly View from the Corner – Week ending 9/28/2018
October 1, 2018
A New Low in This Economic Indicator?
The central focus here in these Weekly Views relative to our economic watch is the forward impact the landscape will have on markets generally. We’ve offered endlessly if solid growth dissipates, or worse, falters to negative growth the stock market in particular will be vulnerable to notable downside price action.
On this note it is important to realize markets look out into the future and trade according to “what they see” (or think they see) hence we experience unexpected, if not confusing volatility at times.
On the employment front the Weekly Unemployment Insurance Claims can be one of several warning indicators that the employment market is softening. With this, if the employment market softens we would have further evidence the economy overall may be weakening.
The aforementioned Weekly Unemployment Insurance Claims move into the Continued Unemployment Insurance Claims when a claimant receives said benefits for more than one week. The Continued Claims gives us a better sense of how “sticky” a developing Unemployment scenario may be.
With this offered both Weekly and Continued Unemployment Claims have been running at multi-decade lows which speaks to the solid strength of the labor market and the economy generally. The above chart reflects a multi-decade view of Continued Claims with a twist.
For our part we like to also think of this relative to the Working Age Population (ages 15-64) in order to get a better context of our current Claim levels. It makes sense to not only look at the actual Continued Claims number but to also place it as a percentage of said population; realizing the overall population has grown through the decades.
With this, our current resulting figure depicts a new low in the Continued Claims as a Percentage of the Working Age Population. This new low dates back to the mid-1960’s!
This data bottom lines us, yet again, that our current economic backdrop is rock solid. As offered above, markets are forward looking so this does not guarantee an absence of volatility. What it does offer us, through this employment market warning indicator, is that we currently have no sirens ringing within the employment landscape which is a key indicator for the economy at large.
I wish you well…
Director, Market Research & Portfolio Analysis
Portfolio Manager, CAMS Spectrum Portfolio
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