Rock-bottom jobless claims might be overstated
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Over the last few months, there's been a steady stream of large, high-profile layoffs — while unemployment claims remain at rock-bottom levels.
Why it matters: The apparent discrepancy is stark enough that some folks have started asking if generous severance packages are keeping this key measure of the labor market artificially low. JPMorgan analysts decided to tackle the question.
The big picture: The analysts estimate that severance payments tied to layoffs — which are typically part of the kind of downsizings seen recently at tech firms like Google, Amazon, Meta and Microsoft — could have translated into roughly 50,000 fewer applications for unemployment benefits in recent weeks.
What they're saying: "While rules vary by state, severance generally would either delay or reduce one’s eligibility for unemployment insurance, so people who were laid off and have been receiving severance may not have filed for unemployment insurance yet," JPMorgan economists wrote.
- But, but, but: Even if jobless claims were 50,000 higher, the data would still be consistent with a rip-roaring job market.
A rule of thumb says a level of 400,000 on jobless claims is a tipping point signaling a possible economic slowdown.
- Even if it's undercounting the unemployed, the most recent weekly claims level (194,000), put together with a remarkably strong January jobs report, suggests the opposite.
