How Long Can Jobless Claims Remain This Low? Economists Comment
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Though jobless claims saw a mid-February jump to 272,000, the number still reached its 51st consecutive week below the 300,000 mark—the longest stretch since the 1970s. But jobless claims can't stay low forever. (Or can they?!) To get some clarity on the topic, we spoke to some top economists to get a breakdown.
Cushman & Wakefield economist Ken McCarthy says claims are likely to remain below 300,000 in 2016 as the economy plows forward with strong job growth and companies become more inclined to retain workers (given the shortage of the unemployed).
The low unemployment numbers push up demand for housing, office space, retail and industrial/distribution real estate, as consumers have more cash in their pockets.
In fact, Harvard economist Ray Torto thinks these low jobless claims are "just the leading edge" of a trend that will continue until the next recession. He says the next big labor market issue will be a shortage of people for jobs, "not only skilled jobs, but even the unskilled ones," Ray says.
However, Yardi economist and Director of Research and Publications Jack Kern is a little more bearish on the jobs front, telling Bisnow the steady trend of 10,000 new claims a month will likely push it past the 300,000 threshold.
"Certainly by the end of the year jobless claims will leap above 300,000 and gain traction to 350,000 by the end of 2017," he says.
Anything below 5% unemployment is worrisome, he says, as it means payroll inflation is set to kick in. Wage inflation—while fuel prices are flat and the Consumer Price Index is low—could mean stagnant hiring and consumer spending. "We’re not looking at deflation just yet, but it has now appeared on the horizon," Jack says.