I’ve been monitoring initial jobless claims closely for the past several months, to see if there are any signs of stress. This is because the long leading indicators were negative one year ago, and many - but not a majority - of the short leading indicators have recently turned negative as well. So I have been on “recession watch.” But no recession is going to begin unless and until layoffs increase.

To reiterate, my two thresholds 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 average turns higher.

As of this week, initial claims continue to be very close to their expansion lows. The 4 week moving average of claims Is 213,500, only 12,500, or 6.1%, above the lowest reading of this expansion:  

On a YoY% change basis, the 4 week average is exactly even with where it was one year ago:

The most recent monthly reading, for September, like August, was slightly  (+0.4%) above where it was in the full month of September 2018:

Note that this does satisfy the second prong of my metric above, but I’m not too concerned, because this is versus two of the very best monthly readings in the entire expansion.

The less volatile 4 week average of continuing claims is also running -0.4% below where it was a year ago:

In short, there is simply no sign whatsoever of any stress in the jobs market that we could expect to see in the immediate months preceding a recession. The recession risk for Q4 of this year is rapidly receding.