– by a New Deal Democrat
Jobless Claims: A Close Call, But Red Flags Persist , Initial claims fell -9,000 to 228,000 last week, and the four-week average fell -9,250 to 237,500. Continuing claims, one week late, rose 33,000 to 1.754 million:
More importantly for forecasting purposes, initial claims are up 7.0% year-over-year, the four-week average is up 10.6%, and ongoing claims are up 30.8%:
Just as importantly, the average for July so far is around 233,000, only about 8.4% above last year’s average for the month.
My discipline requires 2 consecutive months or 8 consecutive weeks of comparisons higher by 12.5% or more on a yearly basis. Otherwise, the peak may just be transient noise. So with this week’s number, the chain is broken. Unless there is a sharp increase in new claims in the remaining weeks of July, there is no red signal for a recession.
However, with initial claims leading the jobless rate, the jobless rate is still forecast to rise slightly over the next few months: