The Unemployment Rate Drops to 4%
Benjamin Cowen
Labor Market Data
The unemployment rate has dropped back down to 4%, which is a good thing. However, it could be an artifact of several different things, including changes in immigration. The main driver for the increase in the unemployment rate has been the expansion of the labor market, with more people entering the workforce, rather than a significant number of layoffs.
Unemployment Rate by State
The unemployment rate varies by state, with some states seeing an increase and others seeing a decrease. For example:
- Alabama's unemployment rate went up to 3.3% from 2.9% in October.
- California's unemployment rate has been increasing, but then stalled out.
- Colorado's unemployment rate has been increasing rapidly, from 2.6% in August 2022 to 4.4% now.
- Connecticut's unemployment rate is at its lowest level in the business cycle, at 3%.
- Nevada's unemployment rate has been steadily increasing, which could be a warning sign for the labor market.
Alternative Unemployment Rate Measures
- The unemployment rate for people out of work for more than 15 weeks saw a drop this past month.
- The number of people not in the labor force has been increasing, but the methodology for measuring this has changed, which could affect the data.
Initial and Continued Claims
- Initial claims are still relatively low, at 219,000.
- Continued claims have been steady, but it's getting harder to find a new job, even though layoffs haven't picked up.
Recession Indicators
- The smooth recession probability indicator shows a low probability of recession, at 0.14%.
- The SAM rule recession indicator triggered a signal, but it was short-lived.
- The composite leading indicator is still going up, which is a good sign for the economy.
Bitcoin and Inflation
- If the unemployment rate comes in low, it could reinvigorate inflationary fears and lead to a bounce in the long end of the yield curve.
- The 10-year yield is currently at 4.5%, and if it breaks out to 5%, it could cause Bitcoin to struggle.
- The Michigan one-year inflation expectations jumped to 4.3%, which is a big increase and could be a sign of inflationary pressures.