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Recession and Record Lows in Claims do not Coincide

CAMS Weekly View from the Corner – Week ending 12/6/2019

December 6, 2019

This past week offered continued information on the general health of the employment landscape in the United States.

While the eye-popping, well reported new jobs surprise released on Friday from the Bureau of Labor Statistics (BLS) came in at a much higher than expected level of 266,000 new jobs created, Thursday morning offered its own measure of continued health in the employment backdrop as well.

Every Thursday morning, the U.S. Department of Labor (DOL) reports on the number of new claimants that have filed for State Unemployment Insurance.  This gives us a weekly view into the general storyline of the labor market, by state, via the compiled national report.

As a general rule the lower the number that are filing for new Unemployment Insurance the more stable/strong the general labor market.

This past Thursday the reported number continued to post multi-decade low levels coming in at a remarkably low level of 203,000.

For perspective, historically we see these Initial Claims run in the mid 300,000-to-low 400,000 range as the economy weakens to recession.

The aforementioned Weekly Unemployment Insurance Claims move into the Continued Unemployment Insurance Claims when a claimant receives said benefits for more than one week.

With this offered both Weekly and Continued Unemployment Claims have been running at multi-decade lows.   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.

With this, our current resulting figure depicts a continued multi-decade low in the Continued Claims as a Percentage of the Working Age Population.

This data bottom lines us, yet again, that our current economic backdrop remains solid.

Through the above employment market measures we currently have no sirens ringing within the employment landscape that would offer recession is imminent.

I wish you well…

Ken Reinhart

Director, Market Research & Portfolio Analysis

Portfolio Manager, CAMS Spectrum Portfolio


H&UP’s is a quick summation of a rating system for SPX9 (abbreviation encompassing 9 Sectors of the S&P 500 with 107 sub-groups within those 9 sectors) that quickly references the percentage that is deemed healthy and higher (H&UP).  This comes from the proprietary “V-NN” ranking system that is composed of 4 ratings which are “V-H-N-or NN”.  A “V” or an “H” is a positive or constructive rank for said sector or sub-group within the sectors.

This commentary is presented only to provide perspectives on investment strategies and opportunities. The material contains opinions of the author, which are subject to markets change without notice. Statements concerning financial market trends are based on current market conditions which fluctuate. References to specific securities and issuers are for descriptive purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. There is no guarantee that any investment strategy will work under all market conditions. Each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. PERFORMANCE IS NOT GUARANTEED AND LOSSES CAN OCCUR WITH ANY INVESTMENT STRATEGY.

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