There’s a blizzard of data this morning. I’ll report on retail sales and Industrial production later.

But let’s start with initial jobless claims, which were unchanged this week at 262,000, the highest level in over 18 months. The 4-week average increased from 9,250 to 246,750. Continuing claims, with a one-week lag, increased from 20,000 to 1.775 million:

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Recently a similar spike of over 260,000 was revised away due to a State’s reporting issue. So far it has not happened this time.

YoY initial claims are up 20.7%. The more important 4-week average is up 15.4%, the first time it has been over 12.5% since immediately after the pandemic. Continuing claims are up 30.6%:

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Here is 50 year+ look at the Yoy% change in the 4-week average and continuing claims, both normed to 0 as of this week’s reading:

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Except for brief spikes of only a few weeks, only once in the past 50+ years (specifically, 1989) has the 4-week average of initial claims been this higher YoY without there being an imminent recession. Continuing claims this much higher YoY has *always* signaled a recession, with no false positives or negatives.

Finally, since initial claims lead the unemployment rate, here is what the latest data implies for the YoY change in the unemployment rate in the next several months:

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The unemployment rate could climb another 0.2% or 0.3% in the next few months. This would still not trigger the Sahm rule, which retrospectively reliably tells us we are in a recession after it starts.

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