by Calculated Risk on 5/08/2008 09:47:00 AM

Here is our monthly look at unemployment claims. Note that continuing claims has now reached a four-year high of 3 million.

From the Department of Labor:

In the week ending May 3, the advance figure for seasonally adjusted initial claims was 365,000, a decrease of 18,000 from the previous week's revised figure of 383,000. The 4-week moving average was 367,000, an increase of 2,500 from the previous week's revised average of 364,500.
...
The advance number for seasonally adjusted insured unemployment during the week ending April 26 was 3,020,000, a decrease of 10,000 from the preceding week's revised level of 3,030,000. The 4-week moving average was 2,998,750, an increase of 16,750 from the preceding week's revised average of 2,982,000.

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 solidly above the possible recession level (approximately 350K).

Labor related gauges are at best coincident indicators, and this indicator suggests the economy is in recession. Notice that following the previous two recessions, weekly unemployment claims stayed elevated 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.