Unemployment Claims Weekly Chart Hinting at Recession Ahead

Keystone likes to use the 4-week MA to gauge the Unemployment Claims that are released at 8:30 AM EST on each Thursday morning. Typically, there is trouble ahead when the claims begin running higher above the 4-wk MA. These are not typical times, however, considering a 3-year once-in-a-century pandemic is only now ending transitioning into the endemic phase like the regular flu.

The Wall Street commentaries are a continuing battle between the recession and non-recession (no recession, a soft recession, or a recession much further out in 2024) camps. It is usually an easier call since the claims will pop above the 4-wk MA and then head off to the races higher as the US economy sinks into the recession ooze.

Federal Reserve Chairman Powell is emboldened to keep hiking rates because he believes the jobs arena is strong (claims remain low). Recent data encourages his viewpoint, however, we are on the cusp of another stab at the recession. You will have to watch claims each week and see if the claims start jutting higher which ushers-in the recession. Flat or down claims will keep the recession with Godot (it will not yet arrive) since the number may slip back below the 4-wk MA. Time will tell.

As per the Department of Labor, Claims come in at 194K yesterday with the 4-wk MA trendline at 190K.

The chart clearly shows the back and forth moves across the 4-wk MA which correspond to the pundits arguing if a recession is coming, or not. It is like getting slapped in the face with the left hand, then right, then left, then right, mother, daughter, mother, daughter, mother, daughter.... 

For the claims chart, there was no sign of a recession as 2022 began. That was the top in the US stock market then whammo. Claims jump higher and the economy looks shaky but by summertime all was fine especially with the lovely ladies frolicking on the beach in their colorful bikinis. But, oh no, trouble again as Halloween approached. Pundits proclaim that the recession is coming. Nope, never mind, it is another fake-out move. Nothing to see here, move along.

Over the last couple months, the non-recession camp is walking around with their chests puffed-out proclaiming there is no recession in sight and Pope Powell is wise to keep etching more rate hikes into the tablets brought down from On High. Not so fast, recession non-believers.

The right-hand side of the chart shows trouble again. Will it be another fake-out move? Or is a recession finally on the come? Watch it every Thursday morning going forward so you will know.

The Philly Fed is indicating a recession likely and Keystone's Housing Market Indicator is signaling a housing recession for the last 2 months. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added Thursday Morning, 2/23/23, at 9:00 AM EST: Claims come in at 192K this week a touch above the 4-wk MA at 190K so the moving average will be pulled a touch higher. Will next week's Claims exceed 200K or will the job market resiliency continue and Claims fall way below 190K?