I created a new recession indicator based on claims. Hurricanes have nothing to do with this.
There has been a lot of ink, most of it misleading, regarding a huge spike in hurricane-related initial unemployment claims.
I discussed charts of the data in my previous post, Initial and Continued Unemployment Claims Surge, a Cause for Alarm?
Understanding the Lead Chart
- The problem with continued claims is that benefits in 48 of 50 states expire after 26 week. Once a person hits 27 week, they are still unemployed but they have no claim.
- To address this issue, I add those unemployed 27 weeks or more to continued claims.
- Since claims are weekly, I compute a monthly average (not a 4-week moving average) of continued claims and add that to the monthly total of those unemployed 27 weeks or more.
The slope of the total rise (blue) is stunning vs the continued claims rise (red).
Unemployment Level 15+ Weeks and 27+ Weeks
If that does not look concerning, then you don’t know how to read a chart.
History suggests that once a person hits 15+ weeks they do more than the distance to no unemployment insurance.
Continued Claims and 27+ Weeks Detail
U1 Unemployment 15+ Weeks
The BLS defines the U-1 Unemployment rates as the percentage of people unemployed 15 weeks or longer.
The recent spike is obvious. And at 15 weeks no one can blame this on hurricanes.
McKelvey Type Recession Indicator
From these 3-month moving averages, we can create a McKelvey style recession indicator comparing a rise in the three-month moving average of 15+ weeks to a prior minimum.
For discussion of the McKelvey Recession indicator, please see Mcelvey-PMES Recession Indicator Weakens Slightly but Signal Still Firm
McKelvey looks back 12 months but 15+ and 27+ indicators are so lagging (especially the latter) that we don’t want to look back too far.
I use a lookback period of 5 months because it seems to provide the best signal.
U1 Unemployment 15+ Weeks McKelvey Style
The Mish-McKlevey recession signal has no false negatives since 1948. It has either zero of two false positives depending on the level needed to reset the indicator.
The current value of 0.28 is very elevated and strongly suggests the US is in recession right now.
It is this upturn, not the level of claims that indicates recession.
A rise of the unemployment rate caused by an increase in the supply of labor from 6 million immigrants over the last 2 years is different than a rise of the unemployment rate caused by job cuts, a reduction in demand for labor, or a recession.
I think you are accurate, especially given the comment below about high current GDP estimates. But I don’t think you’re gonna find a lot of love for your view here
“The current value of 0.28 is very elevated and strongly suggests the US is in recession right now.”
Can we please call this a jobs recession at most? CY Q2 GDP was 3% and Q3 is currently predicted to be 3.2%.
Just about everything except industrial production / manufacturing is up or holding its own, and even those metrics are not in the tank.
I just don’t get it. How many months can we cry wolf on a recession?
Do I think there’s one looming out on the horizon, yes, I do. But, there’s got to be some level of GDP deterioration towards 1% for us to get the warm fuzzy that it might be around the corner.
More like a bifurcated economy. See FEDwire statistics:
Fedwire Securities Service – Quarterly Statistics (frbservices.org)
Ain’t that the truth!
High school needs to change
80% lower class need to be put into JOB TRAINING
20% who test into college bound get regular advanced courses for college
We desperately need to identify those students that are good at taking tests.
This is important as the Government spends quite a bit on good test takers.
Not so much on folks that can think outside the barrel.
LMAO. The ‘Government’ spends far more on hiring less-than-competent people.
Durham, in NC, tested its applicants for the Fire Department. A typical question:
A building on fire is 350 feet away. How many 60-foot hoses do you need to get there?
a) 3
b) 4
c) 5
d) 6.
The US Department of Injustice successfully argued the test was unfair to some applicants, and could not be used.
The test was 100 multiple choice questions:
15 reading questions20 math questions20 writing questions15 map-reading questions30 questions on interpersonal competency and human relations
https://www.msn.com/en-us/news/us/durham-will-pay-1m-to-firefighter-applicants-rejected-by-unintentionally-racist-test/ar-AA1rWKAq
If there are so many long term unemployed
then why does virtually every business have ‘We’re Hiring’ signs on doors/windows/delivery trucks
I heard people are thumbing their noses at $20 an hour
guess they really aren’t unemployed
many service industry hire then fire workers who don’t have skills and/or untrainable
they pay 6 figures
Virtually everyone, everywhere?
Are you speaking for the nation or your home town?
Local restaurant can’t find help. They are looking for a dishwasher with 3 years experience. It is at crisis level.
I know owners that are dishwashers and soup makers too… you do what you must, to get by. As the network gets smaller due to closings, this will all work itself out. A better pool to pick from, equals better work/product. From food, to painting, it’s all relative in the end isn’t it…
Although a lot of hiring depends upon keeping your relatives employed.
Perhaps they should lower their expectations and accept Bachelor of Arts candidates and quit waiting for some Bachelor of Science with really skills.
Three years of experience? Seriously?
– I heard people are thumbing their noses at $20 an hour, guess they really aren’t unemployed.
> You must look at what you’re seeing, through a different lens.
– $20ph is a standard wage in many places, but mostly where it needs to be.
– People not willing to work for that, will hold out and wait for more.
– When everyone is offering the same thing, for the best they must pay more.
I dare say, nobody is thumbing their nose at $20 ($42,000.00 Yr. Ft), and they will all get filled eventually. It actually started awhile ago, as jobs become harder to find.
Unions have been scouring for wage increases, before the recession hits officially, and they Can’t get one. The problem there, is that the lower rung will have voted themselves out of a job, due to expense cuts (ie. Labor) coming.
It’s a shell game is all, and not at all uncommon for the times that we are currently in. The way out is painful, and made more so, by bad decisions being made now. They are simply prolonging the necessary evil, as payback for too much spending!!!
‘We’re Hiring’ signs on doors/windows/delivery trucks don’t cost much, sometimes nothing.
Who can tell if someone desperate could show up and accept any wage.
Initial claims are weekly. Cont claims from two weeks to infiniti (red) must be larger than 27+ weeks to infiniti (yellow). By the end of recession cont claims stall and decay. Between 2010 and 2015 the yellow was > the red. Why. What the point of adding the yellow and red together (blue).
Continuing claims are only out to 26 weeks for most states. Not to infinity
I suggest you read the article because clearly you didn’t
Tump just came out with this direct quote
“The stronger must dominate and not mate with the weaker, which would signify the sacrifice of its own higher nature. Only the born weakling can look upon this principle as cruel, and if he does so it is merely because he is of a feebler nature and narrower mind; for if such a law did not direct the process of evolution then the higher development of organic life would not be conceivable at all.”
i just read this out loud and then got far enough into the sentence to realize trump is not this intelligent, and then realized whose quote it was lol
If the quote was from Aristotle, it would be quoted and re-quoted, and considered eternal wisdom.
Not Aristotle. That’s from Hitler
I had not heard he said this, but “If” he is quoting Hitler, that might cost him some Jewish voters.
And I wonder what his motivation is?
I would not mate with a Democrat so I agree with the quote.
if some hawt young lady, begged you to fornicate with her and you said no, due to her dumb amerikan uniparty registration, i’d say you need some therapy or back to school time.
Giving Rodney a little respect couldn’t hurt-
https://www.imdb.com/title/tt0090685/
““The stronger must dominate and not mate with the weaker, which would signify the sacrifice of its own higher nature. ”
Mathematical idiocy.
Think about it.
if one, took the bait of the comic relief, i saw from a pal of mine, that i just copied and pasted, perhaps the idiot is actually people that take it serious. mein kampf is a great sociology book and also a madman’s rambling like donald’s speeches. both things can be true at the same time. i’m an idiot, is always the proper default in life of a good trader and VC and r/e investor. a great FX arb trader taught me 30 plus years ago, even if one assumes they are the top 1% smartest of men, there are 80,000,000 who are smarter and maybe the kid who is on other side of the trade or argument in life.
Exactly!
Also, I thought the Strong mated with the Weak, to help make the weak stronger?
The problem is when you mate with the first thing that walks in the door. Strong? Weak? Let’s f__k like bunnies and live on welfare for generation after generation, which was Planned Parenthood’s original mission (to stop).
Let’s assume the strong should mate with the weak to make them stronger. The equivalent is the ‘harem.’
I’m sure Mish, in his travels, has seen a stallion with his herd of wild horses. The other stallions, assuming they survive the fight, get what, exactly?
IT WAS A JOKE. everyone knows it was Hitler. and not donald.
That’s from Friedrich Nietzsche.Trump loves Nietzsche. Nietzsche admired the giant Israelite in the original holy bible and had zero respect for the christian’s knockoff story that Jews killed a god, the only people who killed a god, thus more powerful than god himself.
Ray Nitschke was tough!
He goes about 4 words before he loses his train of thought and fills his diaper.
Dr. Fauci used an immune suppressing drug on immune suppressed people. AZT. 10’s of thousands died. Dr. Ezechial Emanuel said that people over 75 shouldn’t seek life prolonging care. These are so called intelligent people.
The quote is from Mein Kampf, Chapter 11. Race and People.
Before we apply it to people, let’s apply it to race horses.
Secretariat (foaled March, 1970), was sired by Bold Ruler, the brood mare being Somethingroyal, whose daddy was Princequillo, considered to be the best long distance runner in the US. BTW, Bold Ruler was the top sire in North America for about 7 years. He won the Preakness in 1957.
The point is that genetics provided much of the basis for the Secretariat’s incredible success. The rest was training etc. The same is true for breeding dogs, tulips, viruses, and soldiers (the fictional version is WACK: Weighted Average Capacity to Kill).
Now, let’s consider the world’s most intelligent ‘group’ of people–that would the Ashkenazi–usually attached to ‘genius.’ You can read about it here:
https://en.wikipedia.org/wiki/Ashkenazi_Jewish_intelligence
where much effort is expended to show otherwise–that is, what came to be known as ‘scientific racism.’ Eugenics, and Margaret Sanger (of Planned Parenthood) are past their prime, yet gene splicing exists for the very same reasons.
As for Trump saying it… I can’t find it. Perhaps a link would help, but it sounds like AI interfering with the election.
IT WAS A JOKE. everyone knows it was hitler and not donald. good god man.
Jokes aside, America has a long history of eugenics. Surprisingly, it was mostly a Democrat thing. ‘You cannot not know history.’
BTW, ‘surprisingly’ IS A JOKE.
That people would believe Trump said this is merely indicative of the extent of brain washing.
Mish,
Is there a way to track new or existing claims by zip code?
That could be eye opening
That would be Politically Incorrect.
September producer prices almost entirely benign; very little upward pressure in the pipeline
https://angrybearblog.com/2024/10/september-producer-prices-almost-entirely-benign-very-little-upward-pressure-in-the-pipeline
I’m loving this economy (whether you want to say it is in recession or not). I prefer to think of it as slow growth. But I’m not going to quibble.
What matters is: are there still opportunities to take advantage of for those who are willing to?
And many are.
the market is on fire………..gold up 40% trailing twelve. nobody is out of work that wants to work. the uniparty will elect either dumpy or mamala. makes no difference. our crumbling empire is a good thing for most of humanity including amerikans. we’ll let israel be on her own. she’s been used and abused as our bitch for enough of our use.
As always, I am selling into strength and raising cash for the inevitable pullbacks. My cash position has been vacillating between 15% and 25% many times this year.
I think Mish will eventually be right on his recession call, and markets could suffer a larger drop sometime next year. If I get worried next year I will increase my cash position significantly. But I am not worried yet.
Time will tell.
Right now, it looks like stocks top in November. But the money stock is increasing. So, we’ll have to wait and see.
Happy to hear you’re bailing out slowly.
Life is too short to remain stupid.
LNG does look like a decent short term play, but won’t the Climate Zealot’s and Electric Camps go wild enough to slow its potential down considerably? I know it didn’t work, yet, with EV’s but it’s coming, and so may a climate blow to NG perhaps.
I could always be wrong on natural gas. Right now, I believe that there will be a large increase worldwide in electricity consumption in the next decade. AI, EVs, Crypto, and demand from the billion plus who don’t even have electricity yet.
Where will the electricity come from?
Other than China, no one else is building new nuclear generation facilities.
Coal is being phased out everywhere, even in China.
Renewables are being built as fast as possible, particularly in China, but tariffs on Chinese solar, wind, and battery exports are slowing the adoption of renewables in the rest of the world. Many will still be built, but nowhere near enough to meet demand.
Which leaves natural gas. Gas generation can be built faster and cheaper (at the moment) than renewables can. There are 133 new gas plants being built or scheduled to be built in the next 5 years in the US. I expect this number to increase as electricity demand grows even faster than expected.
Which will help raise nat gas prices.
I have been wondering myself, where all of this electricity is going to come from. I had not realized we had that many gas plants being scheduled to go up. I do agree however, more will need to be built, if we are expected to keep up with the demand being called upon.
I have also wonder, if we are even capable of being able to generate enough electricity for everything that they are demanding, will require it.
Won’t it be much more difficult to keep mass usage online continuously? Won’t mass outages raise calls to reverse this move, if they occur? I see more issues with Electricity as a primary power, than Oil/Gas, and also hacking is going to be a massive problem down the line IMO. We are already seeing cracks in the infrastructure integrity, and with far dire consequences than Gas/Oil has or will ever have imo.
Lots of unanswered questions abound, but with little satisfactory answers for my liking, up to this point anyway…
“I’m through, I must give up optimism after all… It is a mania for saying things are well when one is in hell.”
You should look into investing in Canadian oil producers.
I understand that it can be very profitable.
If this is a recession it sure is an odd one. I suppose it’s inevitable that 11,000 people retiring every day would bend the usual statistical suspects a bit.
Either the unemployed are spending extra time to look for better jobs than what they had, or their skills no longer fit into the market of open positions.
The billions of billionaire dollars flowing into the election isn’t hurting the larger economy either.
HOW WILL THIS IDIOCY FROM MEIN FUHRER DRUMPF change the recession call. “we’ll need a ton of mexican workers to round up the tens of millions of illegal immigrants. keep border open. We need more construction workers and maids to clean up and rebuild. Leave border wide open. Our boys want more meth and fentanyl too. ”
the possessed.
i’m beelzebub, i own your soul.
Inventing the news was what destroyed Dan Rather. Sadly, CBS survived ridicule.
Hello,
Hurricanes –
Ukraine and ME –
Deficit spending –
Help and save us from recession! Don’t stop the music.
GDP is measured by dollars.
Spend, spend and spend.
the kicker that most don’t get. GDP is idiotic number. bombing Russians adds to GDP. stoooopid people pay attention to GDP.
Every ingredient on the label of your box of ultra-processed food is the result of a value chain that added GDP to the economy. Every drug you have to take to counteract the effects of your diet also contributes to GDP.
It’s the equivalent of paying someone to dig a hole and a second person to fill it in.
You mean Jerome & Co. when they vote on monetary policy?
Bombing Russians is good work if you can find it.
Horrifying numbers
this is one of the most blatant cases of retrofitting and backward looking to fit a thesis……..the fed is gonna have to jack up rates. if you are calling for stagflation, perhaps we’ll see that in the future. but right now folks are employed, whether private or for our para military local law enforcement, teachers and bomb makers……..hell the workers are striking………i seriously do NOT know one soul out of a job who wants one. i’m around 100s of fellow college students each week and no geezers in the 4 states i’ve lived plus the cemetery waiting room, of NYC called Florida.
Agree. I don’t know a single person that can’t find work if they want it. A few months ago I knew two people that got laid off and it took a few months for them to get back on their feet but they are all working now.
We’ve lost half dozen people at my employer the last 60 days, they all found new higher paying jobs elsewhere. I’d do it myself but I am too close to retirement and plan on using the rule of 55 in a few years.
The 40’s plus are protected from age discriminations. HR layoffs packages are good to go. A salad of 40’s plus employees along with millennials and zoomers with mickey mouse watches or rolex were prepared for them. Those who accumulated millions don’t care.
IWM up 2% today. Great day to sell OTM covered calls.
“The 40’s plus are protected from age discriminations.”
In theory, but not in practice. HR figured out how to get around that law by the simple expedient that it’s up to you to prove beyond a reasonable doubt that age discrimination occurred.
There’s also the multi-page “sign the no litigation agreement or you don’t get the 5-6 figure severance package.” There’s that.
haven’t had a “paycheck” since i was in my 20s. it’s funny as a teen, i had my own construction and landscaping…..business. got sidetracked to be a tax cow and employee in my 20s. smartened up and became my own boss past 40 years…………zero taxes too. the us tax code is chock filled with free handouts.
Ah, a college studentt, that explains a lot.
as long as israel and ukraine and other assorted evil idiotic vassal states of our idiotic empire are ok, don’t complain. think of the bonus pool of the boys in the C suites of MIC and wall street.
not to mention the pro sports ball idiots which are the modern equivalent of us Army recruiting propaganda and Panem et circenses. The dummies that go the games dressed up like little kids in their heroes uniforms sums up the morons in idiocracy the best. Long Live the Nit Wit Empire.
How would democracy function without an army of dimwits?
I have long doubted a system of having the inmates of the asylum choose, from among their number, a few inmates to be put in charge of managing the asylum.
Doesn’t seem prudent.
I like baseball but you are correct. Conformity of the players is also incredible. Most players sport a bushy beard and a gold chain. There’s not much individuality in the fans or the players. I live in the country and every guy drives a 70k truck with massive tires and sports a beard (no gold chain). America is filled with conformist males searching for one original thought.
In my sector of the health care industry demand for services is way down and many are trying to sell and get out if they can. The slowness is beyond what I and others experienced in 2009-2014, way worse. People are not seeing it because for one the MSM ignore it until it becomes a Republican problem then it will becone a disaster!
Cosmetic dermatologists and dentists take it on the chin in every recession. Undertakers do OK.
Dad, why do they put fences around the cemeteries?
Because there’s folks dying to get in, Son.
Demand for dialysis nurses and technicians is high. Patients with impaired kidneys have to be treated regularilly along with stroke victims who must be fed dress/undress by health aid workers. BLS might discover a few more hundred thousands in the healthcare sector out of ten millions invisible new immigrants.
The implication smells like unemployment at around 13.5m by 2027. At least 4.5m next year. It has all the makings of an epic depression.
Time to invest in tiny home manufacturers
2.5mil Continued Claims is the historical level at past recession starts with COVID a self-inflicted recession not part of the mix. At 1.86mil and 10%+ larger population than 2007, these are not recession levels today. Hiring is occurring in core industrial and energy related sectors while tech is seeing layoffs from hiring too many during COVID. Context is important.
You fail to understand what I thought was the obvious point.
It is the upturn, not the level that is the indicator.
What is also interesting is how this reverberates around the world.
Unemployment in China is already at record levels since the pullback of US trade (particularly youth unemployment, despite ageist hiring practices there).
EU unemployment is mitigated by a tendency to keep people on at lower wages, but southern Europe has chronic unemployment and productivity issues.
EU and Europe in general looks to be headed towards sustained deflation.
This kind of sustained economic stress along with unwanted illegal mass immigration presents a real and growing risk of rioting and insurgency in the streets of European and EU cities, never mind violent crime and homelessness.
How the elites think this can play out well for them and their warmongering agenda is a mystery. Almost no young people are either willing nor able to flight and die for a faraway country they’ve never heard of.
I agree with your view John. Simply counting an uptick in unemployment but not factoring in the 140k+/month people that are added to the social security rolls distorts all the numbers. People here are confused as to why the economy keeps chugging along even though everything *seems* bad and a large part of that reason is the free money being handed out from all social programs.
We have $140+ billion/month in social security handouts. This alone acts as the government “hiring” and paying people to do nothing.
I don’t have the exact numbers but probably similar for medicare.
Then medicaid, snap, infrastructure funding, etc. There is too much money slushing around for a real recession no matter how badly people want one.
I don’t think we’ll ever see a traditional recession (high unemployment) for at least another decade or two unless we have a black swan event. I fully expect massive labor shortages by 2030 especially in healthcare, farming, and trades jobs. That’s where the math is taking us.
bingo. WINNER. we are an empire of .GOV wards of the state. the kids can be convinced of anything. even something as dumb as 9.11 attack was out of the blue and NOT blowback from our troops in israel and saudi……………SELL the kids on WMD. they will buy it hook line and sinker like their dumb parents generation did. pax amerika is really just idiocracy. the game “aw my balls” will be all the rage soon enough.
911 was nothing like you think it was Any intelligent people an see the truth regarding that event
What did Khalid Sheikh Mohammad tell you it was?
9/11 was the result of more-than-two decades of sustained hatred of the US. Anyone who visited the Middle East and North Africa during the period, witnessed it first hand. Many events contributed to hatred, such as the US’ colossal failure in Iran, the Gulf War 1990-1, American culture spreading into Islam, outright envy… It’s a long list of reasons, and Israel is near the top.
Post 9/11, the US was confronted by other terrorist states, inspired to try the same approach. From the outset, Saudi Arabia was known to be a primary agent in 9/11; however, the US could not attack its only ally in the region. Similarly, 2000 years of history showed Afghanistan would be a costly victory.
WMD was an excuse to attack the ‘low-hanging fruit’ of Iraq to send a message to those states–attack the US and this will happen to you.
Straight from the Den of Thieves:
Federal Subsidies. In 2023, federal subsidies for health insurance minus certain related payments made to the federal government are estimated to be $1.8 trillion, or 7.0 percent of gross domestic product (GDP). In CBO and JCT’s projections, those net subsidies grow substantially, reaching $3.3 trillion, or 8.3 percent of GDP, in 2033. Over the 2024–2033 period, the 10 years spanned by CBO’s current baseline projections, those subsidies total $25.0 trillion, distributed as follows:
https://www.cbo.gov/publication/59273
The percentages are probably about the same for that $1.8 trillion.
The sickness industrial complex costs more than Social Security. Heaven knows Denninger has been ranting about that for long enough.
If you were wondering,
“
Social Security: In 2023, 21 percent of the budget, or $1.4 trillion, was spent on Social Security,”
And still there are retired people who can’t afford to live
re: “ People here are confused as to why the economy keeps chugging along”
It’s a revision to the 70’s. DDs to TDs has dramatically increased. Banks don’t lend deposits.
@John when the upswing in UEis gradual, many unemployed slip out of continued claims and into 27+. The sum of those 2 is far more powerful as a signal than either alone. The sum is not just rising, but rising from the same level as most prior recessions.
I’ve replicated Mish’s key results and concur with his conclusions.
Regarding context, I would note that gig economy part-time jobs are now easier to get than in the past but pay less. This tends to suppress both initial and continuing claims, so direct comparison with prior levels is not appropriate. The surge in part-time vs full-time employment is also we’ll do invented I. The data.
The lack of claims masks the economic pain felt by those slicing the small gig-economy pie ever thinner with such jobs.
Thanks – excellent comments and good work on replications.
Especially like the comment on gig work. Anyone working 1 hour on Uber or Lyft is considered “employed”. This artificially lowers the unemployment rate.
Amazon delivery is also gig work, and they are a plenty.