Unemployment insurance initial claims continue to improve

The latest weekly unemployment insurance report was one of the best in quite some time, with initial claims continuing to fall further below the traditional recession threshold, at 364K vs. the 400K recession threshold. The more stable 4-week moving average of initial claims also continues to decline, at 380,250. This is indeed good news, but we need to see that number consistently below 350K for an extended period of time before we can take much comfort in it as far as indicating whether the economy is "healthy" again.

 

Continuing claims were also down, but unfortunately that number is rather useless at this stage since it is unable to tell us how much of the decline was due to people finding work versus people exhausting their unemployment insurance.

 

A recession is still a significant risk for 2012, but at least the unemployment insurance data is not pointing to a recession, as of this time.

 

January and February will be critical months as we see how many of the current jobs were primarily seasonal and go away in January after the post-holiday retail sales season runs its course. The February data will tell us where we really are, whether we see a recessionary jump in initial claims or something more mild and indicative of at least a marginally healthy economy.

-- Jack Krupansky