• 780 days Will The ECB Continue To Hike Rates?
  • 780 days Forbes: Aramco Remains Largest Company In The Middle East
  • 782 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,182 days Could Crypto Overtake Traditional Investment?
  • 1,187 days Americans Still Quitting Jobs At Record Pace
  • 1,189 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,192 days Is The Dollar Too Strong?
  • 1,192 days Big Tech Disappoints Investors on Earnings Calls
  • 1,193 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,195 days China Is Quietly Trying To Distance Itself From Russia
  • 1,195 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,199 days Crypto Investors Won Big In 2021
  • 1,199 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,200 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,202 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,203 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,206 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,207 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,207 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,209 days Are NFTs About To Take Over Gaming?
Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

  1. Home
  2. Markets
  3. Other

WaMu - A Leading Indicator of Initial Jobless Claims?

Yesterday Washington Mutual Inc. (WaMu), a national depository institution with a concentration in the home mortgage business, announced that it was eliminating 10 of its processing offices, which would result in a 2,500 person staff cut. Given that mortgage applications have been falling on a year-over-year basis since the fall of last year (see Chart 1), I guess that it is not too surprising that WaMu might be cutting back on its operations. And, given that housing affordability has plummeted to its lowest level since 1991 (see Chart 2), I guess it is not too surprising that mortgage applications are falling.

Chart 1

Chart2

What does this have to do with initial jobless claims? Given that at least 40% of new job creation in this expansion has been directly or indirectly related to the housing boom and given that the housing demand is cooling (but apparently not housing supply, as discussed by Asha below), then we can expect more WaMu-like staff-reduction announcements from housing-related businesses going forward. Perhaps it already is happening, just not being formally announced inasmuch as the year-over-year change in initial jobless claims is no longer falling. This is shown in Chart 3. Prior to the Katrina-effect in September, initial jobless claims were falling by about 10% year-over-year. In the latest week (February 11), new jobless claims were about the same as year-ago. As the housing sector continues to cool, especially now that Chairman Bernanke has indicated further rate hikes and the bank regulators issue guidelines recommending tighter mortgage lending standards, initial jobless claims are likely to rise above year-ago levels.

Chart 3

 

Back to homepage

Leave a comment

Leave a comment