A consistent theme resulting from our work has been a view of slowing economic growth. Growth has slowed, but the labor market’s resilience has insulated the economy, and most importantly consumers, from significant pressure. The labor market is often the final area of weakness prior to a recession, and we believe cracks are finally starting to emerge.
Initial jobless claims have bottomed, in our view. Many leading indicators of initial jobless claims are forecasting an imminent increase. We’ve all read the headlines of high-profile corporate layoffs, which now may be permeating more broadly throughout the economy.
If initial claims do in fact begin to head higher, it is likely that the stock market’s recent rally will once again come under some degree of pressure.
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