I suspect we will look back on this morning’s report on jobless claims as the first concrete sign of impending recession.

Initial claims rose 18,000 to 241,000, the highest since February 22. The four week moving average rose 5,500 to 226,000. With the usual one week lag, continuing claims rose 83,000 to 1.916 million:

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As usual, the YoY% change is more important for forecasting. So measured, initial claims were up 15.3%, the four week average up 7.5%, and continuing claims up 8.2%:

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One bad week is not enough to change a forecast. As minimum, I would need the four week average to rise over 10%. 

Finally, let’s take our final look at what might be in store for the unemployment rate:

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The monthly average of initial claims is in the middle of its 12 month range. Continuing + initial claims are at the top end of theirs. While that does not suggest an increase in the unemployment rate to a new high, it does suggest that it will not go lower than the 4.1%-4.2% range in the next several months.

Ordinarily I would pay little attention to a one week jump, which normally is just an outlier. It will take at least one more bad week to drive any of these numbers into even yellow flag territory. Still, with all that we know about the tariffs and trade situation, my suspicion is that this data qualifies as “and so, it begins”. 

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