- by New Deal democrat
Initial jobless claims declined 5,000 to 256,000 last week. But hold your celebrations, because that was because last week’s 251,000 was revised 10,000 higher! The 4 week average rose another 6,250 to 249,250, a nearly 8 month high. On the positive side, continuing claims declined 25,000 to 1,359,000:
Typically, but not always, initial claims have risen by 15% or more over its low before a recession has begun. And a longer term moving average of initial claims YoY has, with one exception, turned higher before a recession has begun.
There is now a clear uptrend in all three numbers. The 4 week average of initial claims is now 50% higher than its low. Further, at their present rate, claims will turn higher YoY in November, which would be the signal for an imminent recession.
Finally, because initial claims lead the unemployment rate, it is likely that there will be an uptick in that metric in next week’s jobs report for July.