Initial jobless claims fell modestly to 264,000 for the week ended May 9, slightly below the previous week’s print of 265,000. This week’s result pulled the four-week moving average down to 271,750.
At recent levels, jobless claims suggest that layoffs remain low and job market conditions are positive and improving.
From a historical perspective, the four-week moving average has seldom been below 280,000, putting the recent pace of layoffs in noteworthy territory. That threshold was last breached fifteen years ago.
Strong jobs data conflicts with other recent data that have suggested that the economy has been in a soft patch in recent months, even as jobs data has remained largely constructive. Conditions are reminiscent of early 2014, when the economy flatlined in Q1 even as payrolls were expanding.
The consumer appears to be relatively cautious, as evidenced by tepid retail sales in recent months, despite the potential tailwind of lower gasoline prices, which was expected to provide a potential boost for other discretionary spending. Thus far, households have seemingly been content to pocket that additional cash.
Nonetheless, strong consumer confidence supported by labor market strength should be positive supports for household spending and ultimately overall growth.
Broadly, recent economic data has provided something for everyone; there’s data to suggest that the economy has stalled and other data that points to an economy that continues to press forward, albeit at a sub-par pace. At this point, expectations are for growth to accelerate in the coming months, although consumers will need to play a key role. Stronger income gains would go a long way toward supporting confidence and spending. Whether we are at the threshold of that or not remains an unanswered question.