"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 18 hours Institutional Investors Hold A Lot More Crypto Than You Think
  • 19 hours U.S. Treasury Yields Could Be About To Break Out
  • 20 hours Tesla Stock Stumbles On Model 3 Cancellations
  • 21 hours Yuan Rebounds At The Expense Of The U.S. Dollar
  • 23 hours Iraq Unplugged: No Internet, No Protests, No Money
  • 1 day The Tariff War Could Spark A Debt Crisis In China
  • 2 days Gold Selloff Continues As Dollar Climbs Higher
  • 2 days Gold Investors In A Frenzy Over Sunken Russian Warship
  • 2 days The New King Of Electric Cars
  • 2 days BlackRock Goes Bitcoin
  • 2 days U.S. Banks See Best Earnings Report In Years
  • 2 days The Case For Gold Is Not About Price
  • 2 days Stock Market Sentiment Turns Bullish
  • 3 days What Is Bitcoin Really Supposed To Be?
  • 3 days The Surprising Media Giant Taking On Netflix
  • 3 days Cybersecurity Stocks Are Red-Hot As Election Looms
  • 3 days Americans Grow Weary Of U.S. Trade Policy
  • 3 days What Putin Really Wants From Trump
  • 3 days Europe’s EV Sales Growth Is Slowing
  • 3 days The Looming "Hyper-War"
The Surprising Media Giant Taking On Netflix

The Surprising Media Giant Taking On Netflix

Professional wrestling is not often…

Chinese IPO Fervor Slows As Xiaomi Disappoints

Chinese IPO Fervor Slows As Xiaomi Disappoints

The Chinese IPO space was…

The Biggest Winners Of Q2 Earnings Season

The Biggest Winners Of Q2 Earnings Season

The second quarter of 2018…

Paul Kasriel

Paul Kasriel

Paul joined the economic research unit of The Northern Trust Company in 1986 as Vice President and Economist, being named Senior Vice President and Director…

Contact Author

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