by Reduntu
Recessions Shaded. Red line is current status, +30% YoY
What are continued claims? Each week, the government releases a count of how many unemployed people continued to claim unemployment insurance for another week. When this number increases, it means currently unemployed people are staying unemployed instead of finding jobs and re-entering the workforce.
Historically, every time continued claims has increased by at least 20% from the previous year, a recession immediately follows. There have been zero cases where it increased 20% YoY without a recession. Sometimes it is a lagging indicator (occurring in the middle of the recession), sometimes it is a leading indicator (occurring months before the recession), but there has never not been a recession when it crosses this threshold.
Continued claims also tend to lead the unemployment rate. About half the time continued claims shoots up just before the unemployment rate does. The other half the time they move together at the same time. This appears to be one of scenarios where continued claims is giving us a warning before the unemployment rate moves.
Why YoY? There are many ways to view these data and they all say the same thing. YoY data clearly delineates change in trend, which, when it comes to unemployment, is the indicator. The forward looking indicator is NOT the current rate/number, but rather change in trend–from where we were. YoY also removes variation due to season.
TLDR: The official recession start date will be during the second half of this year–possibly as soon as the next month or two.