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Members of D.A. Davidson & Co.

Five Economic Reasons to be Thankful

“Here are five economic reasons to be thankful this Thanksgiving…


1) Low unemployment rate.   The unemployment rate was at 3.6% in October. The unemployment rate is down from 3.8% in October 2018 (a year ago), and is down from the cycle peak of 10.0% in October 2009.  This is almost the lowest level for the unemployment rate since 1969 (the unemployment rate was at 3.5% in September)!  Also, this is the largest decline in the unemployment rate, from cycle peak-to-trough, since the BLS started tracking the unemployment rate in 1948.  (In the early '80s, the unemployment rate declined from 10.8% to 5.0%; a decline of 5.8 percentage points.  The current decline from 10.0% to 3.5% in September is 6.5 percentage points!)


2) Low unemployment claims.  The number of new claims for unemployment insurance benefits is close to the lowest level since the 1960s (with a much smaller population back then).  The four week average of new unemployment has fallen to 220,000, about the same as a year ago, and down from the peak of 660,000 during the great recession.  The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims is at 219,750.  The low level of claims suggests relatively few layoffs.


3) Job Openings Near Series High.  There were 7.0 million job openings in September. This is still solid, but down from 7.6 million in September 2018.  For the nineteenth consecutive month, there were more job openings than people unemployed. Also note that the number of job openings has exceeded the number of hires since January 2015 (almost 5 years).  Also Quits are up 3% year-over-year. These are voluntary separations. A large number of job openings, and rising quits, are positive signs for the labor market.


4) New Home sales are at a Cycle High.  New home sales were at 733 thousand SAAR (Seasonally Adjusted Annual Rate) in October, and 738 thousand SAAR in September (highest since July 2007).  Sales were up from 557 thousand SAAR in October 2017, and up from the cycle low of 270 thousand SAAR in February 2011.  Since New Home sales are an excellent leading indicator for the economy, the new cycle high suggests no recession in the next year.


5) Household Debt burdens are near record lows.  Household debt burdens have declined sharply since the great recession.  The Household debt service ratio was at 13.2% in 2007, and has fallen to a series low of 9.69% in Q2 2019 (most recent data).  The overall Debt Service Ratio decreased in Q2 2018, and has been mostly moving sideways and is at a series low.  Note: The financial obligation ratio (FOR) declined in Q2 and is also near a series low.  The DSR for mortgages is also at a series low (since at least 1980).  This ratio increased rapidly during the housing bubble, and continued to increase until 2007.  This data suggests aggregate household cash flow has improved.” 


(Five Economic Reasons to be Thankful dated 11/28/2019 by Bill McBride via


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