Here are the first time unemployment claims from 2000 to 2008. Although the first time claims rate accelerates before the 2001 recession, that doesn’t happen in every recession, with the first time claims generally being a trailing indicator. The lowest point on the chart, touched briefly at the peak of dotcom boomery, is about 260k.

Here is the last couple of years of first time claims. Its highest point is about 260, which it touches during spikes. Although it looks more variable than the chart above, it’s not. It might be even slightly less variable. It’s low points are at 190,000. If I were to look at this, I would assume the jobs number would be substantially higher. We’ve created about 150,000 jobs over the last six months. To absorb new entrants into the labor market, that should have been 600,000. To grow, that should have been closer to 800,000.

There is a degree to which we could be job hugging. No one is convinced they can hire a decent replacement. No one is convinced they can find a better job. People aren’t getting fired and they aren’t quitting. And there aren’t enough new jobs to absorb new entrants. What we should see in the JOLTS data are low separations, low hires, and low openings. But that’s not what we’re seeing. Which actually further confuses the situation.

Separations and hires are still historical norms. Openings are still high. This leads me to be even more convinced, every passing week, that we’re measuring the wrong thing. That’s dangerous because we can be optimizing the wrong numbers. Maybe the Fed is too worried about the job market. Maybe it’s doing better than anticipated. I’m more convinced the job market is structurally different than it was even 10 years ago. That means comparing even 2006 numbers with 2026 numbers could be misleading. Is the gig economy, ranging from Uber to Only Fans the new “go to” when you get fired? Should we be measuring the number of gig workers? The BLS understands the need. But the current statistics are too spotty and hard to compare (also because of the lack of history).

If this seems like splitting a hair, let’s take a look at some policy choices. The first is to leave short term rates where they are. This is likely having a depressing impact on the labor market. If we depress the labor market too much, we go into recession. (Although our latest Keynesian experiment may offset that). If we cut rates slowly, we relieve pressure on the labor market, but does that cause more competition for labor to the point where we get inflation? Or does it ease the pressure to relieve the risk of recession? Finally, there is aggressively cutting rates, which what the economics illiterate Cheeto wants. That could drive a freight train of inflation through the economy and tank the dollar. But from the labor market data, it’s hard to say which is right.

All the options seem logical. If you look at the monthly jobs number, it looks like recession is right around the corner. If you look at people losing their jobs and filing unemployment, we have a perfectly fine labor market. If you look at the JOLTS data, the labor market is dangerously tight, with many more openings than workers. Or is the JOLTS data signalling weakness as we drop below the 5,000 level? I’m more partial to the jobs number and its erratic cousin, the ADP report.