In today’s release, the four-week moving average of initial claims for unemployment rose to 232,500 – the worst reading since last December. Initial claims had previously reached the lowest level in its 55-year history at just 170,500, yet a slew of recent layoffs has taken the measure to an 8-month high as recessionary evidence continues to grow. So, while jobless claims are still at a very low level by historical standards, it’s the upward trend that has often provided confirmation of an impending recession. Jobless claims have historically bottomed an average of 12 months prior to the start of recession, however pandemic-related distortions will likely cause this indicator’s lead time to be shorter in this instance.
Eli Petropoulos, CFA – Sr. Market Analyst
