Continued claims look bad. But they are only part of the picture. The complete picture suggests recession.
This morning the Department of Labor released Weekly Unemployment Claims numbers.
Initial Claims
- In the week ending October 19, the advance figure for seasonally adjusted initial claims was 227,000, a decrease of 15,000 from the previous week’s revised level.
- The previous week’s level was revised up by 1,000 from 241,000 to 242,000.
- The 4-week moving average was 238,500, an increase of 2,000 from the previous week’s revised average. The previous week’s average was revised up by 250 from 236,250 to 236,500.
Neither Hurricane Milton nor Hurricane Helene had a lasting impact on new claims.
The Bloomberg Econoday consensus was an increase to 247,000 from 241,000. Instead initial claims fell by 15,000.
The good news ends there.
Continued Claims
- The advance number for seasonally adjusted insured unemployment during the week ending October 12 was 1,897,000, an increase of 28,000 from the previous week’s revised level.
- This is the highest level for insured unemployment since November 13, 2021 when it was 1,974,000.
- The previous week’s level was revised up 2,000 from 1,867,000 to 1,869,000. The 4-week moving average was 1,860,750, an increase of 17,500 from the previous week’s revised average. The previous week’s average was revised up by 500 from 1,842,750 to 1,843,250.
Insured Unemployment
The key phrase above is “insured unemployment”.
After someone expires all of their unemployment benefits they become “uninsured unemployment” and the Department of Labor stops tracking.
Expiring Unemployment Benefits
- Most states offer 26 weeks of unemployment benefits.
- Many states with a maximum of 26 weeks use a sliding scale based on a worker’s earnings history to determine the maximum number of weeks they qualify
- Arkansas, Iowa, Oklahoma, South Carolina, Missouri, North Carolina, and Kentucky have a lower number of week.
- Massachusetts allows up to 30 weeks depending on conditions. Montana allows 28 weeks of benefits.
Benefits Expired
Other than Montana and Massachusetts, continuing unemployment claims die at a maximum of 26 week.
Continuing claims understate long-term unemployment by the number of people unemployed for over 26 weeks (and then some factoring in seven states with lower benefits and states with sliding scales of benefits).
Ominous Trends
I discussed the above on September 19 in The Ominous Reason Continued Unemployment Claims Have Improved
The improvement (see the September dip in the lead chart) portrayed a rosy view that did not exist.
Continued Claims and 27+ Weeks Unemployment
Neither Hurricane Milton nor Helene has anything to do with 26 weeks of unemployment, but the hurricanes do have a small impact on recent continued claims (red line).
The above chart looks ominous because it is ominous. And those numbers are September averages. October will be much worse.
Please don’t tell me the numbers are low. They aren’t. But more importantly, it’s major upturns from lows that matter, not the raw numbers.
Continued Plus Long-Term Unemployment Claims Suggest Recession Right Now
On the basis of continued claims instead of unemployment rate, I created a new recession indicator.
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.
For discussion, please see Continued Plus Long-Term Unemployment Claims Suggest Recession Right Now
The current value of 0.28 is very elevated and strongly suggests the US is in recession right now.
randocalrissian: “You have had us in your definition of a recession for how long now? Three full quarters or more? You would think at some point GDP would go down or you’d take off the Peter Schiff mask”
Mish Response: I said May or June.
For those who cannot do the math, that is 1 quarter because Q3 is not released yet.
Earlier this year, I disagreed several time with Danielle DiMartino Booth who said October of 2023.
Since you are a long-time reader (as is MPO45v2) who chimed in with you, might I suggest you both re-read many posts and learn how to subtract quarters.
Admittedly, math is hard.
August 30, 2023
https://mishtalk.com/economics/philadelphia-fed-gdpplus-measure-sure-looks-like-recession-started-in-2022-q4/
Yes I was wrong about 2022 and so were most economists. I have covered this at least 6 times with an explanation as to why we were all wrong.
Since then, on at least three occasions I disagreed with Danielle DiMartino Booth on more recent timing.
You seem to have selective memory.
Apologies, I wasn’t sure which recession call we were all referencing. If it’s any consolation I think we’ll have a recession at end of Q1 2025 or early Q2. If I’m wrong, you can call me out.
Many people have been in recession since 2022.
In real rather than nominal terms the standard of living has been recessionary for most. Inflation has wrecked havoc for more people than it has helped.
Just as the malaligned 7 has proped up the indexes, the 10 percenters have proped up the false econometrics of an unhealthy economy.
Mish, I don’t want to add on too much because at least you’re actually making calls which of course sets you up to be potentially wrong.
But you were making pretty much these same calls (and using the same language about continued unemployment claims) 1.5 years ago: https://mishtalk.com/economics/initial-and-continued-unemployment-claims-soar-the-most-in-15-months/ And here we are six quarters later without a declared recession yet.
And I appreciate some of your posts since that have tried to explain what happened differently later to temper some of your earlier recession claims, but you’re still using approximately the same level of continued unemployment claims as a current predictor of recession. Is today’s economic situation really that much worse off than April 2023?
11,000 boomers a day retiring is messing up everyone’s models. The rate will start dropping off in 2026. The last of the boomers will hit 62 that year, so the retirement rate will drop quickly from 2027 on.
The two false positives in the 90’s make sense to me. The Home Computer revolution, Internet revolution, and personal communication revolutions (pagers, then cell phones) all exploded onto the scene in the mid 90’s and created REAL prosperity for Americans and American companies. So to me it makes sense that the “gearing up” process for this triple revolution rescued the economy from what “should have” been a longer early-90’s recession. I for one don’t consider the Ai revolution to be anywhere near as transformative to daily lives as those three things were in the 90’s. Life and business in 1989 were VASTLY different to life and business in 2000. The 90’s were a real tectonic shift, that delivered real prosperity (then a fake, over-exuberant tech bubble!).
The amount of time and increase in continued claims since its post-COVID lows are consistent with prior recessions. Act as if a recession is taking place.
remember gig workers, part timers don’t get unemployment
The Cont Unemployment Claims are rising, but the labor force is larger, boosted by 10/20 millions illegal immigrants. The CUC is far from catching up with the labor force.
What I see in that CUC Report, is what I saw when it occurred. Around April/May the Jobs started drying up. We have never recovered, except that blip/glitch, that occurred in Sep/Oct time frame (don’t look at alcohol establishments as those are last to go, including restaurants)
I also feel like “Phony Data” was used to have that take place, as it bounces right back up again, to where it belonged.
Perhaps that was done to “Prevent” that straight line upwards during the last couple Months of the election cycle? Not something you would want to see if you were in charge now is it?
Fortunately it is now back where it belongs, but Still Unfortunately for many… so it didn’t work.
The recession won’t come until unemployment goes up significantly and that’s not going to happen because 10k boomers leave the labor force every day.
The social security snapshot is out for September and there are 133k brand new socialists added to the club. That’s now costing $122 billion per MONTH in government spend.
https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/2024-09.html
Next month the numbers will grow, more socialist handouts, more inflation and no recession until the dam breaks. Can’t wait for a president Harris or Trump to get “tough” on immigration and really tear things up with labor and inflation. You’re gonna be damned if you do and damned if you don’t.
The health insurance companies are all going broke because more and more people are needing care. I advised people here to buy insurance companies EXCEPT health insurance and now you know why….the boomer growth is metastasizing right on schedule.
MnkyPOX you said she’s winning. You’re going down with the ship.
SS isn’t linear. The low end get a small booster, chopped by higher medicare and a lower COLA. The high end are addicted to spending. Millennials and the zoomers are infected since birth. Their small intestine was invaded by trillions of good and bad bacterias and ugly feces.
The cost is linear, it doesn’t matter who/where the money is going, it’s all inflationary as it gets spent and there is no productive activity behind it.
MPO : feed your guts with fiber. If u don’t the bad guys, that invaded the small intestine, not all of them, will eat your last defense line against them. The healthcare sector feast on retired boomers. It’s not linear. The rich spend on health and dental insurance, pharma, doctors, hospitals…making things worse, killing them slowly. The poor die faster !
The poor in America get their healthcare free…easy as pie. My Uncle is CEO of a huge Hosp Corp and he said that the numbers are STAGGERING and of course those numbers produce lower than AVG profits due to Govmnt trimming payouts.
Boomers go on Medicare / Medicaid as soon as they can to save costs. Rich Boomers of course can afford private care but they are paying for that.
To save costs or push costs onto taxpayers? The costs are still there, it’s just a matter of who’s paying the bill. In any event, the costs continue to spiral out of control.
You are correct. There is an AVALANCHE of Boomer/Ins spending on Heart Disease and Cancer treatments, etc. My uncle is a CEO of a large Hosp chain and he showed me a Spreadsheet last Xmas that made my eyes pop out. Profits are slim on the Boomer Segment because Medicare pays out so LITTLE on those claims…Dr’s are leaving for other places from Cal, which is where he has his Company (he is majority shareholder)…there is so much more that I could report but I do not have as I have a Power issue here that needs repairs.
WRT…”socialists added to the club”, well that’s a tad offensive. Many folks have stayed right with the law, paid their taxes, saved for their kid’s education and voted along the conservative line.
I’ll agree that SS is a mathematically challenging equation.
Perhaps we should teach math to our young?
The young didn’t create this problem, the “old” people did each and every generation. And socialism is offensive, it hasn’t worked anywhere all over the world yet here we are with ever growing dependence on taking other people’s money to hand out to others.
I agree, however, the young have the power to affect change. It doesn’t appear to me that they will…
Age, generation and party identification of registered voters | Pew Research Center
The new president will start with a plate of pain.
Tell them they get rehired if Trump wins.
You have had us in your definition of a recession for how long now? Three full quarters or more? You would think at some point GDP would go down or you’d take off the Peter Schiff mask.
Right on the nose.
Patience, grasshopper. One needs to look at leading indicators, and GDP is a lagging indicator.
With $100T in assets at stake (stocks, bonds, real estate) at stake, hardly anyone wants to even contemplate a recession. Bad for business, bad for political power…
So naturally the recession that began in 2007 wasn’t officially acknowledged until a full year later, after the stock market melted down in fall 2008 and the recession was nearing bottom.
During a bubble nearly everyone prefers talking their book over preparing for adversity. Schiff is always talking his book too, so I don’t listen to him.
People like Mish knew a huge recession was coming in 2006 (some even earlier), it was inevitable by then just from the peaking of the housing bubble, but they had to wait patiently for everyone else to wake up.
Now is not different. There’s an obvious housing bubble topping out, an obvious stock bubble that has to pop at some point, and an obvious debt crisis ahead. The only hope for the $100T is inflation because real values have to mean-revert.
So many seriously smart, experienced and well-versed people have been so wrong for SO LONG with their recession calls that I think it’s time to contemplate that things really have changed. The population is so bifurcated now, wealth and asset wise, that what we know as a “traditional” recession may no longer exist (or won’t until a world/civil war or calamity causes a huge wealth reset). The government seems to have finally figured out how to eliminate the “yucky” part of the business of the cycle, but in reality they aren’t eliminated, simply offloaded onto the backs of just the lower half of the citizenry. This makes the headline numbers, which are all averages and medians, appear “fine” when in reality it’s very much heaven out there for some and close to hell for many others. With not much in between anymore (the middle class that used to be). If we don’t see a cyclical multi-year bear market or big financial cleansing (default cycle) start in earnest in the next 12 months, then what I stated above will be 100% correct. Recession for thee, but not for me.
Those are very interesting and compelling comments, Cap’n.