US unemployment claims way up: consistent with recession

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U.S. jobless claims registered an increase to 493,000, bringing the widely followed 4-week average to 462,500, its highest level since just after 9/11. Recently, the jobless claims numbers have been creeping up indicating the labor market in the U.S. is contracting. While further analysis may show that Hurricane Ike created this huge spike, this particular report does not change the poor employment outlook.

Starting in late June, jobless claims exploded, going from the high 300,000s to this report’s almost 500,000. Most economists look at 400,000 jobless claims as a red flag for a recession. I tend to look at the year-to-year comparisons, where large increases have been remarkably accurate in predicting prior recessions.

With initial claims now 145,000 and continuing claims above 900,000 over the numbers at this time a year ago, it is obvious that the U.S. labor market is weak and deteriorating.

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Source
Unemployment Initial Claims – Bureau of Labor Statistics

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