People are staying unemployed longer and businesses are pulling back. Fed complacency with this? It’s recklessly ignoring a labor market that’s quietly unraveling.
First, how can the unemployed population (i.e. continuing claims) rise without a corresponding rise in initial jobless claims?
This is a symptom of a cooling labor market, where people struggle to secure a new job after losing their old job.
— Parker Ross (@Econ_Parker) June 12, 2025
What do workers do when they run out of unemployment benefits?
Option 1: They take whatever job they can get.
However, the share of unemployed workers moving back into employment has been trending lower.
or… pic.twitter.com/ivWRBJ1iYD
— Parker Ross (@Econ_Parker) June 12, 2025
The surge in unemployed workers exiting the labor force is a key metric to watch going forward and something I'll be looking to dive into in a future thread.
— Parker Ross (@Econ_Parker) June 12, 2025
If the labor market data continues to cool and tariffs aren't meaningfully passed through to consumers, the Fed would certainly be warranted in cutting sooner and faster.
— Parker Ross (@Econ_Parker) June 12, 2025
I still expect the Fed to maintain a cautious stance.
They are certainly hoping the labor softening sorts itself out once uncertainty is reduced around the trade war and will likely be waiting as long as possible to monitor any potential tariff impacts on inflation.
— Parker Ross (@Econ_Parker) June 12, 2025