One of the most brilliant young economist on the street, Eric Basmajian, points out that the initial claims continue improving while continued claims continue to worsen. He posted a chart that looks at the non-seasonal data vs. 2018/2019 to remove all the distortionary effects.

His conclusion is there is not many layoffs, but people who do lose a job are having a hard time finding a new one.

Moreover, initial jobless claims are not in recession territory but continuing claims are flashing recession signs – big time.

Remember, the Fed is more interested in participation and wages than the overall number. This is why weak JOLTS hiring and quits is a positive signal. 

Meanwhile, there has been a sharp drop off in Christmas and seasonal job advertising.

This underscores the importance of the labor basket. Total non-farm payroll growth is slowing, and today the level is where recessions begin (see arrow). But private sector payroll (circle) growth is already below recession levels.

And everyone will be watching for the unprecedented string of downward revisions.

By the way, while the official consensus for tomorrow is 170,000 jobs, the whisper number edged up to 187,000 after the initial jobless claims release.

So, it is very confusing, but a miss would be an even bigger surprise resulting in a monster relief rally.  Conversely, a “better than expected” number means a one percent + pullback.