03/01/24 09:24 AM EST

Slight Softening in Labor Market

Below is a chart and brief excerpt from today’s Market Situation Report written by Tier 1 Alpha. If you’re interested in learning more about the Hedgeye-Tier 1 Alpha partnership, there’s more information here.

Today's bonus section offers a brief update on the employment market. While survey data has shown inconsistencies in recent years, the latest consumer confidence report highlighted growing concerns about labor market conditions. The Conference Board observed, "Consumer expectations for the next six months worsened in February, influenced by renewed pessimism about future business and labor market conditions." Despite these sentiments, the actual data does not significantly reflect these concerns.

Danielle DiMartino Booth has insightfully noted that the clarity of unemployment claims data is somewhat clouded by an increasing trend among large corporations to extend 6-to-9-month severance packages to laid-off employees. As a result, these individuals are not filing for unemployment benefits and are still counted as employed due to receiving severance pay. Despite these factors, unemployment claims remain historically low.

The U.S. saw a slight increase in unemployment benefits claims, rising by 13,000 to 215,000 for the week ending February 24, slightly exceeding market expectations of 210,000. Furthermore, continuing jobless claims increased by 45,000 to 1,905,000 the previous week, reaching the highest level since November and surpassing market forecasts of 1,874,000. Although these figures suggest the labor market remains robust, there are signs of slight softening, likely a result of the Federal Reserve's extended period of restrictive monetary policy.

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