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Today, we look at good news that is somehow bad news. Initial claims for unemployment fell to 787,000 last week, their lowest level since the pandemic began.
 
The Line with Greg Heym
Today, we look at good news that is somehow bad news.
Initial claims for unemployment fell to 787,000 last week, their lowest level since the pandemic began. Economists were looking for 875,000 new claims, so this data is much better than expected.

But looking through the news this morning, I saw the following headlines from major news sites:
“Stocks push higher, shaking off earlier declines after weak jobless claims report”

“U.S. weekly jobless claims push lower; labor market momentum slowing”
Let me get this straight, we just had the fewest initial jobless claims since March 14, and that’s somehow weak? The momentum is slowing?

Some will argue that part of this decline was due to some workers switching to the Pandemic Unemployment Assistance Program, as they had exhausted their regular benefits. Wasn’t that trend included in the estimates? Seems like it should have been.

I must also point out that I have said numerous times that weekly data is volatile, and to pay more attention to longer-term trends. But that still doesn’t justify calling this data disappointing.

Continuing claims, which trail by one week, fell by 1.02 million to 8.37 million. This marked the fourth straight week continuing claims fell, and they are now 4.37 million less than just one month ago. That’s a 34% improvement!

New York State’s initial claims fell by 9,902 to 56,483, let’s hope that number doesn’t start to turnaround from the rise in virus cases in NYC.
At first glance, yesterday’s report from NAR looks like all good news.

  • Sales rose by more than expected, and were 20.9% higher than a year ago
  • The median sales price rose 14.8% compared to September 2019, reaching an all-time high
  • Inventory has reached a record low of just a 2.7-month supply

But that last bullet point is where the bad news comes in, and unlike the first story, I agree this is a real problem. The rapid decline in inventory has pushed prices up too fast, which is now shutting some buyers out of the market even with record low mortgage rates. The market needs more supply, and that was true even before the pandemic.

Homebuilders are ramping up production, as permits just hit a 13-year high in September. And with these conditions, it’s not surprising that homebuilder sentiment just hit a record high for the second month in a row.

Have a great weekend!
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