– by a New Deal Democrat
Initial jobless claims rose 13,000 to 242,000 last week, while the 4-week average rose 3,500 to 239,250. Continuing claims, one week late, fell -38,000 to 1.805 million:
This is just within the last 2 months.
On a year-over-year basis, initial claims are up 11.0%, the 4-week average is up 10.8% and ongoing claims are up 20.5%:
That’s enough to restore the “yellow flag” caution, but not past the 12.5% mark where I’d start raising the “red flag” recession warning.
We get the April jobs report tomorrow morning, and since initial claims are a leading indicator of the unemployment rate (red in the chart below), here’s what it looks like over the past 18 months:
Initial claims clearly forecast a 0.2%-0.3% increase in the unemployment rate over the next few months, but whether there will be an increase tomorrow or not is impossible to know. But they certainly assume that there will be no *decrease* in the unemployment rate.
Meanwhile, since real retail sales (indicating consumption; blue in the chart below) is a leading indicator of employment (red), here’s the latest update to that comparison:
The gold line represents the quarterly change (*4 to estimate the annual rate) in job growth.
Real retail sales clearly forecast a continued slowdown in job growth. A slowdown in the y/y pace as well as a slowdown in q/q growth suggests a gain of less than 325,000 tomorrow. A negative deviation would be something less than 200,000.