These Often Shared Employment Measures Remain Stable
- cornerstoneams
- Apr 29
- 4 min read
CAMS View from the Corner
April 29, 2025
Over the years we have addressed what we think of as a tip-of-the-spear-type measure within the general employment market. To be fair, there are a few indicators that could be labeled as such, but the Weekly Unemployment Insurance Claims measure is high on the list.
There are a few reasons for this, one of which is we get a new update every week which offers a fresh view a few times per month. In addition, if a person loses their employment they are highly incentivized to submit a claim for unemployment.
Furthermore, employers are highly incentivized to lay off employees when their business slows down in light of decreasing revenues and actual lack of work available for their employee base to undertake in light of reduced orders.
On this note, there has been a belief out there, via an intermittent narrative in recent years that employers will retain their staffing even if their business slows in light of the difficulty businesses have had in attracting employees. This rings of one of those scenarios where it sounds real nice in theory, but upon reality entering the scene, said theory gets tossed quickly.
A notable line item in most businesses profit & loss statements is their labor costs.
Any business will be quite challenged to see an already large line item staying consistently high while supporting revenues are decreasing.
This would escalate their labor costs as a percent of revenues (an efficiency measurement), not to mention watching their important unit labor costs sky-rocket higher. This would place additional pressure on their competitive stance with consumers, and ultimately, their survival.
While it has been quite a while since we shared on this topic, we thought it would be timely to update in light of increasing expectations via various narratives of an incoming recession.
Weekly Claims Remain Contained
This past Thursday, the U.S. Department of Labor (DOL) released the weekly data for Weekly Initial Unemployment Insurance Claims. Specifically, 222,000 claims were submitted for unemployment insurance in the recent update. These levels offer continued stability within the employment market.
The low 200K range is not suggesting a red-hot employment market, but this continued, historically low range offers the employment market is functioning, and through this, it is not offering we have an imminent incoming recession. Below we offer a visual for perspective.
The above chart of the initial claims data dates back to 2021. We can see the precipitous drop in claims coming out of the Covid recession via the reopening of society.
Our red box is meant to highlight the channel that the Initial Claims data has been posting since late 2021. This has displayed a stable storyline since late 2021.
Drilling into the numbers a bit, the low end of the range has been in the 190,000 area while the upper range has intermittently tagged the 260,000 level. With this, our current 220,000 area is essentially falling in the middle of this recent historical range. Continued stability in this metric is the operative phrase.
The Well-Recognized Unemployment Rate
We will add to the stable claims data with the well-recognized Unemployment Rate measure. For its part, we also see stability when viewed through a recent historical lens.
With the most recent update, in early April, this rate came in at 4.2%
While it is elevated off historically significant lows, our current 4.2% unemployment rate is offering general stability at this juncture. Below, we offer a visual for perspective, as well as some potential behavior to monitor.
Like our Initial Claims data chart above, this Unemployment Rate chart also dates back to 2021 for a post-Covid-recession view.
Our red horizontal line denotes the 4% level across the chart. Upon the post-Covid-recession descent for this metric, we see it had been sub-4% for just over two years. By the early spring of 2024, a year ago, we see this metric moved up through the 4% marker and has remained in this low 4% area since.
This 4.2% level has been tagged multiple times in the previous year but continues to remain as a high-water mark in this cycle. The question is, are we on the precipice of a turn higher, and with this potential, a developing trend attempt?
At this stage we see the 4% red line level has been acting as quite a floor, rather than as a ceiling, which it had been holding under. A breakout higher from here will be offering a continued behavioral change of the recent year.
That is, 4% had been a ceiling that was taken out to the upside. From here, this low 4% area has held for nearly a year which will also be taken out if a trend breakout were to occur with coming updates.
Importantly, corroboration of various measures is always the key. As it pertains to this edition’s measures above, if both metrics begin posting higher-level breakouts than what has been shown above, then these real-world employment-related measures will be pointing toward an increased likelihood of incoming recession risk.
Our front-and-center measure remains the initial claims data in light of its frequency of updates as well as the inherent necessity for companies to lay off personnel when orders reduce. We think of this as a quicker siren call than actual employment data as well as the above unemployment rate.
Importantly, both measures above can trend upward together if recession presents itself rapidly. Onset Covid recession is an example of such a scenario. Outside of such a scenario we are watching the frequently released claims data to see if they will kick up and trend from here.
If so, we will then be on alert for an expected incoming reduction of employment growth along with an increase in the unemployment rate.
For now, both of the above measures remain stable.
I wish you well…
Ken Reinhart
Director, Market Research & Portfolio Analysis
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