It's Thursday ¯\_(ツ)_/¯

Initial claims


Claims vs New HiresBoth the weekly unemployment report and the updated 2nd quarter GDP results are out, and it looks like the beginning of a recession to me, because the new hire numbers are falling off of a cliff.

Eventually, that will bleed over into the economy:

The number of Americans filing new applications for jobless benefits slipped last week, but re-employment opportunities for laid-off workers are becoming more scarce, a sign that the unemployment rate probably remained elevated in August.

Though the labor market is slowing, it is doing so in an orderly fashion that is keeping the economic expansion on track. The economy grew faster than initially thought in the second quarter, powered by consumer spending, other data showed on Thursday. Corporate profits also rebounded last quarter, helping to further dispel fears of a recession.

While the labor market slowdown positions the Federal Reserve to start cutting interest rates next month, the data argues against a 50 basis point reduction in borrowing costs.

I'll take the under on that one.  If the Fed cuts rates, my money is on ¼% (25 basis points), not 50.

………

Initial claims for state unemployment benefits fell 2,000 to a seasonally adjusted 231,000 for the week ended Aug. 24. Economists polled by Reuters had forecast 232,000 claims for the latest week. Claims have retreated from an 11-month high in late July as distortions from temporary motor vehicle plant shutdowns for new model retooling and the impact of Hurricane Beryl faded.


A step-down in hiring because of tighter monetary policy is accounting for the loss of labor market momentum, rather than layoffs. It has attracted the attention of officials at the U.S. central bank, including Fed Chair Jerome Powell who last week said "the time has come for policy to adjust."
Financial markets expect the Fed to begin its easing cycle next month with a 25-basis-point reduction in its benchmark overnight interest rate. A half-percentage point cut is on the table. The Fed has maintained its policy rate in the current 5.25%-5.50% range for more than a year, having raised it by 525 basis points in 2022 and 2023.

………

Gross domestic product increased at a 3.0% annualized rate last quarter, revised up from the 2.8% rate reported last month, the Commerce Department's Bureau of Economic Analysis said in its second estimate of second-quarter GDP on Thursday. The economy grew at a 1.4% pace in the first quarter.

I expect the economic news to get worse over the next few months.