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Takeaway: Jobless claims hit their lowest level since 11/24/73. The labor market faces extreme resistance against improving much further from here.

Below is an excerpt from a research note analyzing this morning's initial claims data from Hedgeye analyst Josh Steiner. If you would like to setup a call with Josh or Jonathan or trial their research, please contact sales@hedgeye.com

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Jobless Claims ... Party Like It's 1973? - z ccc

The chart above shows that seasonally adjusted initial claims just hit 255k, the lowest level in forty two years. The last time claims were lower was November 24, 1973, when the reading came in at 233k. While this exemplifies extreme strength in the labor market, it also represents a point of extreme resistance against claims going any lower.

We continue to point out that this party has an expiration date, which we estimate to be about five quarters from now.

In the last three cycles, once claims dipped below 330k they remained there for 24 months, 45 months, and 31 months, in the late 1980s, late 1990s/early 2000s, and 2006-2008 period, respectively before the economy went into recession. In the current cycle, claims have been below 330k for a little more than 16 months and counting. The average of these last three cycles is 33 months, which would translate to another ~5 quarters of track.