Market focus likely turning to labour outlook: Berman

Historically, the labour market is always the last part of the business cycle to break.

This cycle, given the difficulty of finding qualified workers post-COVID-19, is likely even more leveraged to the health of the U.S. worker/consumer. You have likely heard that consumer credit for the lower half of income earners is already being stretched.

You have also likely heard that most of the jobs created in the U.S. over the past year have been part-time jobs. It’s clear from these two metrics that the labour market (i.e. the consumer) is fragile.

This chart shows the pre-COVID-19 recessions and U.S. Initial Jobless Claims. Historically, the lower end of weekly claims was about 300,000 in recent decades given the 150 million plus of the labour force. The recent post-COVID-19 layoff levels have been closer to 200,000, so still pretty low overall. But it’s clear that employment is the key to recessions.