by Calculated Risk on 3/20/2008 08:49:00 AM

The 4-week moving average of weekly unemployment insurance claims reached 365,250 this week.

From the Department of Labor:

In the week ending March 15, the advance figure for seasonally adjusted initial claims was 378,000, an increase of 22,000 from the previous week's revised figure of 356,000. The 4-week moving average was 365,250, an increase of 6,000 from the previous week's revised average of 359,250.

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. Notice that following the previous two recessions, weekly unemployment claims stayed high for a couple of years after the official recession ended - suggesting the weakness in the labor market lingered. The same will probably be true for the current recession (probable).

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.