Jobless claims surged higher this week, rising from 236K up to 298K in what was the largest one week increase since November 2012 in the aftermath of Superstorm Sandy. Given the complete halt to business activity in the Houston region as a result of Hurricane Harvey, this increase should have surprised nobody. As we noted in last week’s post on jobless claims, “All good things must come to an end, though, and because of the impacts from Hurricane Harvey, you can expect that in the next couple of weeks, claims will definitely be rising back above 250K and most like back above 300K as well.” Therefore, the increase in claims was generally expected by most market participants, which is evidenced by the fact that futures had little reaction to the release.
While this week’s surge in jobless claims was expected by just about everybody who looks at it, one group that got it completely wrong were economists. You know, the people who are supposed to be on top of these things! Heading into this week’s report, the consensus forecast for the print was an absurdly low level of 245K. Which causes us to question, how in the world did the people whose jobs it is to track the economy completely miss an increase in jobless claims that was expected by just about everyone else? Looking on the bright side of this week’s report, claims did still manage to remain below 300K, which extended the streak of sub-300K readings to 131 straight weeks! Whether we get to 132 remains a big if. With Hurricane Irma headed for Florida’s most populated region, it may be some time before the weekly claims reading normalizes.
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