For the last few weeks, I have been highlighting that there is likely some unresolved post-pandemic seasonality in the initial claims numbers. That certainly looked like the case this week, as a sharp decline mirrored a similar sharp decline 52 weeks ago.

To wit: initial claims declined -20,000 to 201,000, the lowest number since February. But exactly one year ago, they declined -5,000 to 192,000, part of a -24,000 monthly decline to a 50 year low of 182,000 on September 24th.

The 4 week average this week also declined -7,750 to 217,000, also the lowest since February. And continuing claims, with a one week delay, declined -21,000 to 1.662 million, the lowest since January:

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But the YoY% changes make clear the effect of unresolved seasonality. On that basis, weekly claims were higher by 5.2%, the 4 week average by 10.4%, and continuing claims by 28.9%:

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The 4 week average being higher by more than 10% YoY is enough to maintain the “yellow caution flag” but not over the 12.5% threshold that, if maintained for 2 months, would warrant a “red flag.”

On a monthly basis, despite the big declines on a weekly basis, so far September is running 11.8% above last year:

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That suggests that the unemployment rate over the next few months is likely to trend towards 3.9%-4.0% (1.118*3.6%, the average unemployment rate in summer and autumn last year). The “Sahm Rule” for recessions would only be triggered by an average unemployment rate of 4.0% or higher this coming winter, which would be 0.5% higher than last winter’s average of 3.5%

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