January Jobs: How bad will it be?

Okay, we didn’t lose a million jobs in December. I don’t think we are going to lose a million jobs in January either. Nonetheless, initial claims have (almost without fanfare) crept back up to the high 500 thousands and continuing claims are within 2 percent of their all time high, a record set in the early 1980s. This was also the last time the labor market deteriorated as rapidly as it has over the last several months. Take a look at the long time series. Unemployment looks bad. Then take a look at the next graph, a blowup of the more recent data. Both continuing and initial claims have virtually doubled relative to their 2006 levels.

My model is once again predicting a loss of over 800,000 jobs. I am not inclined to step back from this estimate. I see nothing in the macro data to make me believe the estimate is too high. If anything with the collapse in trade and the abysmal growth numbers from the United Kingdom, I am more confident in this estimate than I was in my December forecast.