Initial jobless claims are up 2,000 to 230,000 in the week ending September 7 after a minor upward revision to 228,000 in the prior week. The reading matches the consensus in the Econoday survey of forecasters. The four-week moving average is up a scant 500 to 230,750 and remains consistent with a labor market well able to absorb laid off workers.

The insured rate of unemployment is unchanged at 1.2 percent in lagging data for the August 31 week; with the exception of a one-week tick lower to 1.1 percent in the June 8, 2024 week, this rate has held unchanged since March last year. Unemployment for workers eligible for benefits reflects the stability of labor market conditions.

The level of insured unemployment benefits is also little changed with a 5,000 increase to 1.850 million in the August 31 week. The four-week moving average is down slightly by 2,250 to 1.853 million in the August 31 week. These small week-to-week moves are not significant and do not signal any change in momentum for the labor market.

Overall filings for jobless benefits and those that move on to the unemployment rolls show a labor market that has cooled off but is not cold. The FOMC will not want levels to rise further but these are not alarming in regard to maintaining the maximum employment side of the dual mandate.

Jobless claims for the September 7 week are expected to come in at 230,000 versus 227,000 in the prior week, which dropped the 4-week average by nearly 2,000 to 230,000.

New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. An increasing (decreasing) trend suggests a deteriorating (improving) labor market. The four-week moving average of new claims smooths out weekly volatility.

Jobless claims are an easy way to gauge the strength of the job market. The fewer people filing for unemployment benefits, the more have jobs, and that tells investors a great deal about the economy. Nearly every job comes with an income that gives a household spending power. Spending greases the wheels of the economy and keeps it growing, so a stronger job market generates a healthier economy.

There's a downside to it, though. Unemployment claims, and therefore the number of job seekers, can fall to such a low level that businesses have a tough time finding new workers. They might have to pay overtime wages to current staff, use higher wages to lure people from other jobs, and in general spend more on labor costs because of a shortage of workers. This leads to wage inflation, which is bad news for the stock and bond markets. Federal Reserve officials are always on the look-out for inflationary pressures.

By tracking the number of jobless claims, investors can gain a sense of how tight, or how loose, the job market is. If wage inflation looks threatening, it's a good bet that interest rates will rise, bond and stock prices will fall, and the only investors in a good mood will be the ones who tracked jobless claims and adjusted their portfolios to anticipate these events.

Just remember, the lower the number of unemployment claims, the stronger the job market, and vice versa.