by Calculated Risk on 2/21/2008 08:58:00 AM

The 4-week moving average of weekly unemployment insurance claims reached 360,500 this week, indicating a possible recession.

From the Department of Labor:

In the week ending Feb.16, the advance figure for seasonally adjusted initial claims was 349,000, a decrease of 9,000 from the previous week's revised figure of 358,000. The 4-week moving average was 360,500, an increase of 10,750 from the previous week's revised average of 349,750.

Click on graph for larger image.

This graph shows the weekly claims and the four week moving average of weekly unemployment claims since 1989. The four week moving average has been trending upwards for the last few months, and the level is now above the possible recession level (approximately 350K).

Labor related gauges are at best coincident indicators, and this indicator suggests the economy might be in recession.

Note: There is nothing magical about the 350K level. We don't need to adjust for population growth because this indicator is just suggestive and not precise.