After the summer slump: labor market continues to improve

There are two pieces of data that tell us how the economy is doing at (almost) this precise moment. The first is initial unemployment insurance claims data, which comes out weekly on Thursdays (see here). These data continue to show improvement after a brief increase over the summer, with the four-week rolling average for new claims as of October 21 falling from 5,297 to 5,025 in San Bernardino County, a 5% drop in new claims. See the chart below.

The second piece of data is about consumer spending, from Affinity Solutions (see here), which is updated somewhat regularly. Right now we have information for San Bernardino County through the week ending on Sunday, October 10.

Consumer spending is up 22% from January 2020, and more importantly, this number has been trending upward since mid-August 2021. After consumer spending stagnated through the summer due to the rise of the delta variant, the fall is shaping up to be a stronger buying season. There is clearly still a lot of pent-up demand in the economy.

A lot of factors continue to complicate forecasting, including labor shortages and whether variants of the virus will destabilize worker confidence, childcare, and schools yet again, but there are reasons to be optimistic about future labor market conditions.