March 27, 2025

Initial unemployment claims declined 1 thousand in the week ending March 22 to 224 thousand after rising 2 thousand in the previous week.    There is no evidence that the labor market has been affected by layoffs thus far.  However, we know that some government workers are being fired.  Those people eventually will show up in the data, but March 22 may be a bit early for that to occur.  Keep in mind that federal government employment is only 2.0% of total employment so the impact for the economy as a whole should be fairly small. This series has changed very little in the past eleven months.  The 4-week average of claims was 210 thousand at the end of April 2024  versus 224 thousand today.

The number of people receiving unemployment benefits declined 25 thousand.in the week ending March 15 to 1,856 thousand after climbing 30 thousand in the previous week. This series has changed very little in recent months.

Given the small decline in the number of people receiving unemployment benefits, the insured unemployment rate was unchanged in the most recent week at 1.2% after being unchanged in the previous week.  Before the shutdown started in 2020 it was at 1.2% so it is still at its pre-pandemic level. .

The insured unemployment rate tracks closely the unemployment rate.   Given the level of the insured unemployment rate, we expect the unemployment rate to be unchanged in March at 4.1%.  We also expect payroll employment to increase 150 thousand.  These numbers will be released on April 4.

Inflation has peaked and is slowing gradually.  The funds rate currently is 4.3%.   We expect it to fall to 4.0% by the end of this year.

We expect GDP growth of 1.5% in the first quarter and 2.5% in 2025.

Stephen Slifer

NumberNomics

Charleston, SC