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The US Jobless Claims Number: Becoming Meaningless ?
Feb 20   ( From NFIB, CFIB )​
The Situation


Financial Markets always have been giving tremendous weight in trading for job numbers.

In a way, it is a direct pulse to the economy and data have been published on a weekly basis ( in the case of Jobless Claims ).​​

But since the financial crisis, a real disconnect happened between the US Jobless Claims and the situation of the Labor Market...​​

It is not the objective of this article to explain why but just to reflect that disconnect...​​








The US Jobless Claims Number: a Definition


​​The number of people who file for unemployment benefits in a given week. This data is collected by the Department of Labor, and published as a weekly report. The number of jobless claims is used as a measure of the health of the job market, as a series of increases indicates that there are fewer people being hired.


​​History Suggest


On the chart below, you can see the change since the past 40 years of the weekly and continued claims ( 4- Week Moving Average ).​​



4-Week Moving Average of Continued Claims ( Blue / Left Scale )

​4-Week Moving Average of Initial Claims ( Red / Right Scale )


SP500 and the Jobless Claims

​

Financial Markets always have been giving tremendous weight in trading for job numbers. In a way, it is a direct pulse to the economy and data have been published on a weekly basis ( in the case of Jobless Claims ).​​


As you may observe on the chart below, ​​changes in Jobless Claims tend to be price sensitive for the Mighty SP500 Index...



4-Week Moving Average of Initial Claims , Change from Year Ago, Number ( Blue / Left Scale )

​ S&P 500 Stock Price Index,  Change from Year Ago, Index - Inverted  ( Red / Right Scale )

​


The Total Disconnect


Since the crisis, there have been a total real disconnect between ​​the 4-Week Moving Average of Initial Claims and the US Civilian Employment-Population Ratio as shown by the chart below...


US  Civilian Employment-Population Ratio % ( Blue / Left Scale )

​4-Week Moving Average of Initial Claims Inverted ( Red / Right Scale ) 


And by the way, the last times we had the US Civilian Employment-Population Ratio at that level was in 1984 ( the big recession ) and previously in 1973 with the oil shock...


Trading the Disconnect !


The chart below is just showing the Mighty SP500 Index and the ​​US Civilian Employment-Population Ratio in %.




US Civilian Employment-Population Ratio % ( Blue / Left Scale )

​ S&P 500 Stock Price Index ( Red / Right Scale)


Conclusion


The big financial shock of 2007/2008 have been so devastating for the economy that workers being laid off for so long started to lose their willingness to come back in the labor force...


​​I think that part of the disconnect comes from that ​​workers who have exhausted regular unemployment insurance benefits during periods of high unemployment just became out of the work force but still within the population.


That s why the US Jobless Claims Number have become Meaningless for me...

And since the FOMC Quantitative Easing, SP500 have been trading more like ​​a monetary aggregates than on economic numbers!


The US Jobless Claims Number: Becoming Meaningless ?  $MACRO, $STUDY, $SPY, $SPX, $ES_F,