Initial jobless claims declined from -12,000 last week to 237,000. The four-week average declined from -6,750 to 246,750. With a one-week delay, continuing claims increased from 11,000 to 1,729,000:

(Click on image to enlarge)

More importantly for forecasting purposes, the YoY% increases were 7.2% for the weekly number, 14.5% for the 4-week average, and 31.6% for continuing claims respectively:

(Click on image to enlarge)

This is the 4th week in a row that the 4-week average has been higher YoY by more than 12.5%. If this continues for several more weeks, that would be sufficient to trigger a red flag recession warning from this series.

Finally, since initial claims have a long-established history of leading the unemployment rate, here is the comparison of YoY claims averaged monthly (blue) as well as the 4-week average, compared with the YoY% change in the unemployment rate (gold):

(Click on image to enlarge)

Note importantly that the graph above measures the change in the unemployment rate as a “percent of a percent,” so for example a 10% increase from 3.6% would be just below 4.0%. To trigger the Sahm rule, we would need a 0.5% increase in the actual rate from the 3-month average of the lowest unemployment rate in the past year. To put it plainly: for forecasting purposes, we’re not there yet. But since the Sahm rule tells us retroactively when we have started a recession, it doesn’t affect my own forecasting analysis.

More By This Author: