“Many travel three hours from Manhattan – some even fly in overnight – to pay $255 (before wine and tip) for the privilege of eating in the basement of a modest clapboard home in Earlton, N.Y. Formerly known as the Basement Bistro and now simply called Damon Baehrel, the 12-table restaurant has a five-year waiting list. Patrons have come from 48 countries, and celebrities such as Jerry Seinfeld and Martha Stewart regularly visit. The Obamas reportedly requested a table in 2011, but Baehrel, who prefers to keep his guest list private, won’t confirm or deny this. He doesn’t have to worry about loudmouthed waiters, either: ‘You’ve probably realized I work completely alone here,’ Baehrel says each night before service begins. ‘I’m the chef, the waiter, the grower, the forager, the gardener, the cheesemaker, the cured-meat maker, and, as I will explain, everything comes from this 12-acre property…’ Baehrel earned one of the country’s highest Zagat ratings: 29 for food and 28 for service, out of a possible 30. Baehrel also won his first James Beard nomination, as best chef in the Northeast in 2013.”
This excerpt from a December 2013 Bloomberg story tells of the oft-cited most exclusive reservation in the United States. In 2026, Baehrel’s establishment will celebrate its 40th year. Before delving into other exclusive reservations of the dismal science variety, a recap of yesterday’s weekly jobless claims is in order.
In the week ended February 21st, initial jobless claims rose 4,000 to 212,000, marginally better than the 216,000-consensus estimate. The latest figure fits into a channel of higher lows from last November’s bottom of 192,000 (aqua line). Since troughing in 2022, initial claims have navigated three waves. The fourth one is backed by the four-week moving average coming in near the 220,000 level for a third straight week, no better or no worse vis-à-vis mid-January’s low point of 204,000 (yellow line). Continuing claims remained in sideways range (purple line), and the 1.833 million print in the week ended February 14th held above the 1.820 million mark, support going back about two years.
Danielle’s informal Thursday X (formerly known as Twitter) poll added perspective to the plight of the newly unemployed. It simply asked: “If you lose your job today, to cover the bills, would you apply for unemployment benefits or pick up ride/delivery gig?” As of last evening, 55% would apply and 45% would pick up the gig out of 323 votes. The fact that the second choice, by a coin flip, made the grade, should have Wall Street questioning if unemployment claims are understating the alleged jobless narrative perpetuated by range-bound data and fundamental interpretations that keep credit spreads artificially tight.
Jobless claims are hard wired into the traders’ psyche. Disentangling them is close to impossible. Each week’s number is likely interpreted reflexively. There’s no argument that claims are one of the most real-time observations on the U.S. labor market. But there are times that old news is new news which shifts the collective thinking. On Thursday morning, the 2025 second-quarter Business Employment Dynamics (BED) report fit the mold. The Bureau of Labor Statistics (BLS) payroll benchmark to the Quarterly Census of Employment and Wages (QCEW) unemployment insurance records rewrote nonfarm payrolls’ (NFP) history so dramatically that it left Jonathan’s mouth agape, as in, he stopped breathing. BED revealed an over-the-quarter drop of 321,000 (lilac line), 395,000 lower than the currently published +74,000 BLS private NFP figure. Put another way, the average run rate for private payrolls was slashed to -107,000 during that three-month interval from +25,000 as it is allegedly reported in the official statistics.
What makes this even more significant is that it’s an all-in private figure, INCLUDING recession-proof Education & Health Services. Excluding this, the Private Core numbers registered an even larger over-the-quarter plunge of 384,000 (light blue line), 265,000 worse than the similar statistic from the official Private Core series. Since the 1992 inception of the BED report, the magnitude of the second-quarter private and Private Core contractions is the sole purview of recession (that is, shaded in gray and intersecting with the dashed lilac and light blue lines).
BED details up our conviction. Losses were widespread across both industries and states. Nine of the 13 major industries, or 69%, posted declines (dark blue line), and 11 of 13 industries, or 85%, sported below-normal performance (green bars). From a geographical perspective, 42 states out of 51 (including D.C.), or 82% (orange line) declined over the quarter. These granular results are recessionary, not just from a labor market standpoint, but also from a whole-economy perspective.
We might get a Damon Baehrel reservation before the National Bureau of Economic Research, the arbiter of U.S. business cycle expansions and contractions, reaches a capitulation point on recession. While we wait, let’s revisit the September 6, 2025, QIIntelligence Briefing. Pre-benchmarked Private Core payrolls had peaked in April 2025 and failed to expand in May, June, July and August. At the time, this evidence supported our view for the Fed to cut 50 basis points (bps) in September and follow it up with another 50 bps in October. In reality, the Fed lowered rates in quarter-point increments instead. With Thursday’s BED data in hand, our call is vindicated given the initial plunge from the peak in 2025’s second quarter has become decidedly worse. It begs two questions:
- Are business default expectations too low?
- How far behind the curve is the Fed on its employment mandate?