Initial and continued claims from the Department of Labor via St. Louis Fed, chart by Mish

Economists' Estimate

The Bloomberg Econoday estimate: "Jobless claims for the April 1 week are expected to come in at 201,000 versus 198,000 in the prior week."

Well... Not Quite.

Please consider the Department of Labor Unemployment Claims Report for the week ending April 1. 2023.

Initial Claims

• In the week ending April 1, the advance figure for seasonally adjusted initial claims was 228,000, a decrease of 18,000 from the previous week's revised level. 
• The previous week's level was revised up by 48,000 from 198,000 to 246,000. 
• The 4-week moving average was 237,750, a decrease of 4,250 from the previous week's revised average. 
• The previous week's average was revised up by 43,750 from 198,250 to 242,000. 

Continued Claims

• The advance number for seasonally adjusted insured unemployment during the week ending March 25 was 1,823,000, an increase of 6,000 from the previous week's revised level. 
• This is the highest level for insured unemployment since December 11, 2021 when it was 1,833,000. 
• The previous week's level was revised up 128,000 from 1,689,000 to 1,817,000.
• The 4-week moving average was 1,804,000, an increase of 10,500 from the previous week's revised average. 
• This is the highest level for this average since November 13, 2021 when it was 2,007,000. 
• The previous week's average was revised up by 101,750 from 1,691,750 to 1,793,500. 

Ah Yes, Negative Revisions

Hmmm. More negative revisions. Who coudda thunk? 

I use monthly averages rather than 4-week averages to show recession bars much easier in Excel. 

Continued Claims Monthly Average 

The uptick in continued claims is both persistent and consistent with recession. 

Initial and Continued Claims Recession Lead Times

On a monthly average basis, initial and continued claims bottomed six months ago. 

Initial and Continued Claims at Recession Start 

It's a mistake to focus on the low level of initial claims. Massive boomer retirements are in play. That kept unemployment claims low and job openings high. 

Expect a Long Period of Weak Growth, Whether or Not It's Labeled Recession

On August 19, 2022, I commented Expect a Long Period of Weak Growth, Whether or Not It's Labeled Recession

What About Jobs?

• The Covid-recession was very short, two months, not even a full quarter of declining growth. The pandemic was also accompanied by the greatest job losses in history.
• I expect the opposite of the Covid-recession: A long period of weak growth accompanied by relatively strong unemployment numbers.

Countless times over the last six months I heard jobs are are too strong for there to be a recession.

We may easily see three or four quarters of negative GDP with relatively strong jobs because we never fully filled the losses from the pandemic. 

There are over 22 million people age 60 or over who are still working. We have never seen anything like this before, so don't expect prior recessions to be a model for this one.

Millions of these people will retire. Employment may drop substantially when these boomers and Gen X employees retire, but falling employment and rising unemployment are not the same thing.

Job Openings Plunge From Dizzy Heights, How Much is Still Real?

A decline in jobs openings is also consistent with recession. For discussion, please see Job Openings Plunge From Dizzy Heights, How Much is Still Real?

Unexpected Weakness in Many Places

While pondering an alleged 10 million openings, please note Unexpected Weakness in ISM Services, Backlog and New Orders Plunge

Also note Factory Orders Unexpectedly Much Weaker Than Expected With Big Negative Revisions

Finally, please note Real Income Was Negative in 2022 Q4, Big Negative Revisions to GDP.

That's OK because the Fed Seeks to "Minimize the Pain of the Journey"

So, nothing can possibly go wrong. 

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