Unemployment claims trend

It is really difficult to accurately assess what is happening with weekly unemployment insurance initial claims. The lastest report shows a moderate rise in initial claims (one strike), initial claims are above the 400K threshold typically associated with a recession (strike two), and the more reliable 4-week moving average of initial claims rose modestly (strike three). Superficially, the report strongly suggests a clear trend into recession. If only it were that simple.

There is a lot of volatility in the weekly data and the 4-week moving average is still only at 382,500, which is certainly elevated, but still not by itself indicating a recessionary rate for initial claims.

Clearly initial claims have been creeping up, but so far there is no evidence of them spiking up the way they would in a true recession.

Overall, the report suggests two things to me: 1) we could see another modest decline in the monthly employment report next Friday (maybe down another 25K to 150K), and 2) the economy remains at the edge of a recession but is still not falling off the cliff into a clear and indisputable and deep recession.

-- Jack Krupansky