Today’s update on weekly jobless claims isn’t very encouraging for expecting a big positive surprise in tomorrow’s news on nonfarm payrolls for July. And that’s the charitable interpretation. But judge for yourself: the latest number on new filings for unemployment benefits shows a rise of 19,000 last week, bringing the weekly total to 479,000—the highest since early April. The year is more than half over and still no sign of improvement in this metric. So much for a V recovery, at least as far as new jobless claims go.

Yes, this data series has a history of moving sideways and sometimes even rising after recessions, as we’ve discussed. But that’s cold comfort these days, when the labor market is struggling with it’s biggest challenge since the Great Depression. On a number of levels, the losses suffered in the job market are unprecedented since the 1930s. And as the weeks and months roll on without convincing signs of a rebound, it’s getting tougher to imagine that a revival of consequence is imminent. We can debate if the jobless claims trend of late is normal or not, but that doesn’t change the fact that the longer this series goes nowhere, the greater the headwinds for growth. Translated: the labor market is, to put it mildly, a key factor in the business cycle, particulary in America where consumer spending is still the dominant slice of the economic pie.

The risk of a double-dip recession may still be slight, in terms of expecting GDP to post losses in the quarters ahead. But if the labor market continues to stagnate, it will feel like a new recession has arrived for the man on the street. Or, perhaps it’s more accurate to say that the old recession never really ended for the average American.
Indeed, today’s weekly unemployment-benefits report tells another troubling story with continuing claims, which tracks the number of unemployed workers who were already collecting jobless benefits. As the trend in this metric strongly suggests (see chart below), there’s no sign of progress here either.

No wonder that investors are rushing back into Treasuries this morning. Until the economic data signals a change in the trend, yields will inch lower, fears of deflation will continue to bubble, and the crowd will be increasingly open to arguments that the “new normal” has legs.
“Treasurys are certainly benefiting from fears that the jobs figure will be another nail in the coffin for the economy as the jobless claims number now implies downward risk to nonfarm payrolls tomorrow,” Tom di Galoma at Guggenheim Partners, told today. Yes, there’s a counterargument to that view. But at this late date you need numbers to make such a case. For the moment, the necessary stats are MIA.