Let’s take our weekly look at jobless claims, particularly since it is one of two “quick and dirty” elements that will indicate whether the “recession watch” I inaugurated yesterday will need to be upgraded to a “warning.”

Initial claims rose 8,000 last week to 247,000, while the four week moving average increased 4,500 to 235,000. Meanwhile continuing claims, with the typical one week delay, declined -3,000 to 1. 904 million:

Both initial claims metrics are at 7 month highs, while continuing claims are just below 3.5 year highs. Since there appears to be unresolved post-covid seasonality at work especially with initial claims - which for the last several years have risen into the summer months and then declined into the winter months - I am taking those numbers with several grains of salt. But the continued elevation in continuing claims strongly suggests that laid off workers are having a harder time finding new employment.

As usual, the YoY% changes are more important for forecasting purposes, and there the trend of the last 8 months remains intact, as all three metrics hover in the +5% YoY range:

Initial claims are up 7.9% YoY, the four week average up 5.9%, and continuing claims up 5.2%. These won’t even raise a yellow flag for a recession watch unless and until they are up at minimum 10%. 

In other words, jobless claims continue to indicate a slowly growing economy in the immediate future.

Finally, since jobless claims lead the unemployment rate, let’s take our last look before tomorrow’s jobs report - and here, this week’s new data makes a difference:

With the additional data, it now appears that there is some upward pressure on the unemployment rate going forward for the next few months, as initial + continuing claims together were at new highs. While a decline in the unemployment rate to 4.1% cannot be ruled out, an increase to 4.3% this or next month is very possible as well.

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