My U1 (15-weeks unemployment recession indicator) is very elevated.
What Is the Mish U1 Recession Indicator?
The BLS defines the U-1 Unemployment rates as the percentage of people unemployed 15 weeks or longer.
I compare a rise in the three-month moving average of 15+ weeks unemployment to a prior minimum lookback period of five months.
The formula is 3-month moving average minus the minimum of the last five months.
When readings are above 0.2, in all but one set of instances since 1948, the economy has been in recession.
U1 Unemployment 15+ Weeks
Unemployment Level 15+ Weeks and 27+ Weeks
The relationship between rising long-term unemployment and recessions is clear.
Using 3-month moving averages of the 15+ weeks unemployment smooths out fluctuations and the lookback comparison ties things together in a manner that reduces false positives.
Related Posts
August 1, 2025: Birth-Death Model Analysis Suggests 979,000 Overstatement of Jobs
The BLS released Business Employment Dynamics for 2024 yesterday. Let’s discuss.
August 1, 2025: Payroll Disaster, Jobs Rise 73,000 but Massive Negative Revisions
There were 258,000 negative revisions in May and June.
August 7, 2025: Continued Unemployment Claims Jump by 38,000 to New High Since Nov 6, 2021
Continued claims hit a new high for the move of 1.974 million. That’s not the full story.
The labor market is much weaker than most economists realize.
With all these fake numbers DT is throwing out this smells like the 1920’s. Why did Apple stock go up when they announced onshoring of the iPhone when it will increase its cost to manufacture? Gold is shooting up. If too many people make bets on fake news/data someone will be left holding the bag. And the wizard will be exposed!
So you’re saying the entire market is a Ponzi? What about Bitcoin hehehehe?
On 3 Sept 1929, the DJIA average reached a peak valuation of 381.17. Ninety-six years later (97 by fractal count) on 23 July 2025, the DJIA reached a peak valuation of 45073.63, about 118 times the previous century’s earlier peak valuation. The average US house in 1929 was about 6000 US dollars and in 2025 about 515000, a comparable 85.5 times fold increase in valuation.
The DJIA valuation peak in 1929 was near the close of a US 1807 to 1932 :: 36/90 year first and second fractal series … and the peak valuation in 2025 near the close of a US 1982 to 2026 13/33 year first and second fractal interpolated series, part of the greater US 1807 36/90/90/54 year :: x.2.5x/2.5x/1.5x 4-phase fractal series with a 90 year third fractal peak in Nov 2021, propelled yet higher in valuation in 2024 and 2025 by unprecedented US peacetime deficit to GDP Covid spending of about 15% and 12%, respectively, in 2020 and 2021.
Fractal economics ( http://www.economicfractalist.com/blog/ )picks 11 August 2025 for the hourly-minutely global equity blow-off peak.
Trump’s two big stagflationary shocks—tariffs and deportations—are hitting large companies and SMEs very differently. Large companies have more pricing power, have more flexible supply chains, and can more easily get (largely corrupt) carve outs that mitigate the shocks on them. SMEs, by contrast, suffer the full brunt of the shocks.These differential impacts of the Trump shocks explain why the S&P500 is up and Russel2000 is down over the last 6 months. Now, in terms of recession indicators, we know that recession signals from SMEs are picked up by the data much later than recession signals from large companies (as also illustrated by the recent BLS job figurer). Taken all this together, my guess is that we will be in the middle of a recession without the data really telling us that the recession is happening.
The U1 Recession Indicator as presented is a lagging indicator. Simple moving averages are by definition low-pass filters, which lag. I would use the U1 Recession Indicator as confirmation of a recession than a predictor.
That said, the big question is, “Why is this data set the only false positive in 70+ years?”
COVID saw a lot of side hustles and people with multiple jobs working from home. This could lead to a situation where someone files for UI when losing one job even though he is still working one or more jobs from different states. One state won’t cross-check with another to verify UI eligibility. Someone who loses 1 of 2+ jobs is still going to spend money, and now has even more time to do so.
COVID may have pulled retirements and layoffs forward, much like debt pulls demand forward. Weak businesses closed. Stronger businesses expanded, but were more selective, so there are fewer people likely to be laid off as the economy slows. Companies are taking longer to hire.
Recent minimum wage increases in states with large populations forced enough people out of work to show up in statistics.
The trouble with this: “situation where someone files for UI when losing one job “
… is that the rate of initial UE claims remains historically extremely low.
What’s rising are the Continuing claims, particularly in the VA-MD-DC area. Still plenty of room for claims fraud, but it’s not “I lost my job” initial claims fraud.
Also regarding COVID, it wasn’t “weak” businesses that closed, nor “strong” ones that survived. It was politically-disfavored ones that were killed off, and already-large ones that were (politically) deemed “essential” that survived. There’s a large, large difference in there.
BLS bs. Trump was elected to help the forgotten people who are not on U1 and
27 weeks+ charts. Millions of illegals increased the labor force size, but BLS knows nothing about them. Trump tariffs created new jobs. Instead of Apple Ireland charging $1,500 for IP they will make it here for less and pay higher taxes. Building industrial infrastructure creates jobs. More co compete with the mag7. More co compete with GE Vernova (GEV), which dominates the batteries market, making too much profit. The banks finance the expansion. Lower interest rates will increase their profit.
Big showpiece re-shorings, yeah. But making USA a global manufacturing powerhouse? In time to relieve the beleaguered former middle class? I have yet to see any numbers remotely like that. I think those goal posts will keep moving.
“ Trump was elected to help the forgotten people who are not on U1 and
27 weeks+ charts.”
Yep. But he is burying them instead.
Recessions are baked into the nature of capitalism. On a larger scale, they are economically and socially necessary.
Because capitalism has a tendency to go full-tilt forward, and because its managers become overworked, a recession provides a natural “downtime” in which to recuperate one’s creative and emotional juices. Sure they hurt the bottom line, but the wise corporation is inured because it has made deposits to its bank savings, and these savings will last long enough because they were cleverly calculated.
In saving for the future recession, the wise business is protecting its existence, ensuring it doesn’t have to pare to the bone in painful layoffs and minimizing wasteful things like stock buybacks that don’t add to the bottom line at all. The economy will eventually recover, reaching greater heights than before, and the surviving businesses will be the stronger for it by surviving the ordeal.
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Dark . Sport. Blog is my website — come drop by for a visit!
With normal governments and people wanting nothing to do with Trump’s tariffs and his perverted sycophants, supply disruptions and job displacements are baked into the cake. Small businesses are being hit hard by the tariffs that they have to pay..
Elections have consequences!
All they had to do, was to vote for *anyone* but Democrat or Republican. But then again, 99 percent of the people themselves belong to the uniparty. It’s not Trump or Biden: it’s the people, stupid!
Idiotic quote of the day? According to Mr. Mish?
“If the American people ever allow private banks to control the issue of their currency first by inflation then by deflation the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered… I believe that banking institutions are more dangerous to our liberties than standing armies… The issuing power should be taken from the banks and restored to the people to whom it properly belongs.”
Apocryphal Thomas Jefferson quote, no? Good always to name a source with any quote, rather than leave it dangling off a mention of someone else with tangential implications drifting. Jefferson the guy who wanted little local shires of farmers and plantation kingpins forever, bereft of scaled-up industry and military, which would have made USA roadkill for all kinds of competitors, that Jefferson?
You prefer globalist overlords that dominate the entire planet, not just “local shires.” Point noted.
Almost certainly not that Jefferson. The language is not that of his time period. And in his time, the continent had not yet been conquered either.
So you’re mostly pulling a straw man out of your tail-end, here.
Like most great quotes, the idea stands on its own merits regardless of who said it.
Well these charts are great. There are so many indicators out there that have triggered something similar such as inverted yield curve theory. Yet no recession has materialized. Consumerism is keeping the ship afloat this employment is key here and where I agree we need to watch it close. When spending slows, we got problems as we all know. Boomers are retiring or dieing generational spending is decreasing imo. The new generations are worrying me to say the least. Trans, gay, non binary, pronoun people who vote for Kamala are the real threat because they are socialist. Sorry to make it political, but this will also drive further wealth inequality. We know owning assets is the way, yet socialist ideology is owning nothing.
Massive deficit spending is preventing recognition of the weak-for-many economy, not “consumerism”.
It’s like the elites just went straight to the pill bottle even before the pain started.
They cannot postpone the crash forever, but they will try … and attempt to steal even more of everyone’s purchasing power through inflation.
“The monthly average of continued claims plus 27+ week unemployment is 3,778,000 through July. That’s up from a low of 2,513,000 in September of 2022.”
From a recent article, I think the line of best fit for your last chart of this article suggests that the NBER will declare a recession once we see an additional 250K added to your 3.8M. How quickly we arrive at 4M is hard to say, given that massive government spending slowed down job losses throughout 2024. However, corporations are now taking advantage of tariff uncertainty to shed jobs they don’t think they’ll need by the end of the year.
The Fed as usual is behind the curve, and it’s starting to look like TACO will be dealing with some sort of moderate economic slowdown in 2026. On the bright side, housing will be more affordable this time next year.
#trumprrcession
This is exactly what many economists predicted if Trump got elected. Economics is a dismal science but the Trump economy is more dismal.
It just might take a little longer to call a recession this time around as calling it is career ending in Trump’s magnificent economy. He said it today; the economy is doing better than it ever has, probably because he made the economy, so it has to be the best ever, until he remakes it.
Having grown up in Lowell, Massachusets I saw how water wheels and the 180 degree turn in the Merrimack River made Lowell the first industrial town in the new world. Today industry is not so grounded to the lay of the land.
Stephen Moore put down his Pom Pom and he has calculated some numbers using cheerleader math. Give me a one; give me another one. Donald, that adds up 2 you’re Great!
“And the bankers can and do make the stock market go up at will.”
Idiotic comment of the day
If the American people ever allow private banks to control the issue of their currency first by inflation then by deflation the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered… I believe that banking institutions are more dangerous to our liberties than standing armies… The issuing power should be taken from the banks and restored to the people to whom it properly belongs.
Might want to think about fractional reserve banking, especially now following covid, there are no reserve requirements.
What is idiotic about pointing out the reality?
Meanwhile, the banksters are getting better and better at it. The 2000-02 bear market lasted 2 1/2 years. The 2007-2009 bear lasted 1 1/2 years. The 2020 bear lasted just 2 months. The 2025 bear lasted just 1 month.
Hey Mish,
Can you clarify something?
“When readings are above 0.2, in all but one set of instances since 1948, the economy has been in recession.”
Do you mean .02, as in 2 percent?
The chart shows 0.20 (current reading 0.12)
Take the three-month moving average of 15+ weeks unemployment. Three-month moving average of U1 (percent)
1.5 + 1.8 + 1.6 = 1.633
https://fred.stlouisfed.org/series/U1RATE
Subtract the minimum of the last 5 months.(1.5)
That is 0.13
But I calculate U1 to more than 1 decimal point so my number slightly different than the Fred numbers rounded to 1 decimal place.
My 3-month MA is 1.60
And my min lookback including current month is 1.48
Thus 0.12
I calculate to 2 decimal places, Fred to 1
That accounts for slight discrepancy
Copy all. I’m tracking now. I was looking at the wrong chart when I asked my question. Sorry.
So, let’s say we say that you say that it is a recession. What happens then?
The typical progression is weakness steepens very fast.
But will this be a normal recession or stagflation?
I don’t know so cannot answer the question.
INFLATION: How the wealthy maintain their unearned ascendance. RECESSION: When the bloated equities falter. DEPRESSION: When commerce becomes impossible. Inflation causes depression.
How long before we trot out the add-on “or saved”. In 2008/9 TPTB changed it from jobs created to jobs created-or-saved and, voila, no issues with jobs. We saved 1.4 jiggawatts worth of jobs mon’.
10 jobs for every American, man, woman, and child!
Well worth the read, when the AI spending boom collapses, what will be left?
https://kyla.substack.com/p/how-ai-healthcare-and-labubu-became
“How AI, Healthcare, and Labubu Became the American Economy”
That’s a good link but it only tangentially touches the key point: demographic death spiral. Kyla is correct that healthcare is starting to drain too much productive parts of society and it produces very little of financial value in return. Helping granny live another month when she’s doomed to die isn’t a productive use of resources.
Many may think that analysis is cold and indifferent but we’re talking reality, economics and productivity here. The demographic death spiral will create competing labor priorities for society. ICE is currently offering $50k sign up bonuses and suddenly waived age restrictions, do we want people to become ICE agents or healthcare workers? Ironically, if you choose ICE over health, it means granny will be scarified as a result along with the other 80 million boomers over the next decade.
“Just hire more people!” is the solution to every business and government problem except those people don’t exist and the labor pool continues to dwindle. An economy isn’t fed rates, debt, credit, loans, or defaults, it is an exchange of goods and services between PEOPLE and if the PEOPLE are gone, so is the economy.
It is ironic to die of thirst in an ocean of water but that’s exactly what’s happening with labor, we will have a sea of elderly and an economy starved of labor.
“It’s demographic death spirals all the way down and inflation all the way up!”
My mom probably cost 5 million in her last, miserable 5 years. More than her and dad ever earned in total. She was afraid to die though. Too stoic to admit that or how much she was suffering, but I could see it.
I hope to have the courage to take a graceful exit if I find myself in that state. It’s one thing to talk about it now, and quite another when you are there.
Both my father and father-in-law died in sick beds and it was horrific, it would have been more humane to just let them go with medicine where they go to sleep and don’t wake up.
Over the next decade I expect thousands of horror stories about abuses happening in nursing homes (starvation, beatings, and maybe murder) simply because there won’t be enough people to handle the load. A good preview of what will probably happen is in the mini-series “Five Days At Memorial” which shows how the elderly were treated during Katrina in Louisiana. Multiply that scenario x 40 million or more.
https://en.wikipedia.org/wiki/Five_Days_at_Memorial_(miniseries)
And with medicaid and SNAP cut it will probably arrive a whole lot faster. Next up are social security and medicare cuts. You reap what you sow MAGA boomers.
“Demographic death spiral” is so wrong. The only things that crater with negative growth are ponzi schemes and prices. Both those outcomes are good for the average consumer. Only the rich will call it a disaster. People will adjust; to think that the global population can only increase is silly.
Irrelevant.
All that matters is the banks issuing credit both openly and surreptitiously, and buying and financing assets essentially for free with the money they create out of nothing.
Fact: the government openly lies about the real employment numbers: that’s exactly what the death-birth rate model is, or whatever they’re calling. They are reporting numbers they only presume are real INSTEAD of reporting the real numbers. Anyway, they revise the numbers by hundreds of thousands every other month.
Reality is irrelevant.
The stock market trumps all.
And the bankers can and do make the stock market go up at will.
Stop this nonsense and go for a stroll in the trees.
No doubt there are issues. How much of the U1 is due to anticipation of tariffs and Trump Govt layoffs? How much does that have to do with a normal recession? Stay tuned
I agree. This might be a one time event from gov jobs disappearing. But less gov spending (also different gov spending from last admin) might also cause a recession. This might actually make it a good recession: lower prices and shifting jobs to productive sectors.