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The is NO need to split atoms about this morning’s jobless report. It was a horrendous number, assuring us that the (E), as in employment, in our RIPTE Consumer Spending Model is heading into a darker hole.

Weekly jobless claims spiked this morning up to 448,000, taking the 4 week moving average up for the 2nd week in a row to 393,000. In order to understand macro, I always look back before I take a shot at looking forward. In a historical context to prior US recessions and consumer spending depressions (1), this run rate of unemployment claims is alarming.

Peaks in jobless claims in 1990 and 2001 were reported at 500,000 and 480,000, respectively. There is little doubt in my mind that this cycle sees those prints. The big question is can the US employment picture deteriorate to the 560,000 and 620,000 levels in claims that we saw at the peaks of 1972-74 and 1981-83 cycles, respectively.

The US Consumer is hostage to deteriorating RIPTE “Trends” until the facts bear out otherwise.
KM