- by New Deal democrat As you know, I’ve been monitoring initial jobless claims closely for the past few months, to see if there are any signs of a slowdown turning into something worse. Simply put, if businesses aren’t laying employees off, those same people are consumers who are going to continue to spend, which is 70% of the total economy. So the lack of any such increase has been the best argument that no recession is imminent. This morning’s report of 214,000 initial claims returns us to the 2018-19 average, while the 4 week average of 223,500 remains slightly elevated (possibly due to seasonality issues). To reiterate, my two thresholds for initial claims are:1. If the four week average on claims is more than 10% above its expansion low.2. If the YoY% change in the monthly
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- by New Deal democrat I’ve also added a threshold for the less leading, but also much less volatile 4 week average of continuing claims at 5% higher YoY.
At 223,500, the 4 week average is 11.2% above the lowest reading of this expansion, which occurred last April:
Only one of the two thresholds is crossed, and that is probably due to seasonal quirks having to do with Thanksgiving being one week later in 2019 vs. 2018.
Here is the longer term graph:
ADDENDUM: Since tomorrow is jobs day, let me haul out the graph of initial jobless claims (averaged monthly, blue) vs. the unemployment rate (red):
In the long term historical view (not shown), the unemployment rate lags initial jobless claims by about 1-3 months. So I’m not expecting any further decrease in the unemployment rate, and there is a fair probability of an increase in tomorrow’s report.