Initial Jobless Claims Decline Week Over Week — Is Recession at Bay?

YEREVAN (CoinChapter.com) – On Feb 16, the US Department of Labor released the weekly report on initial jobless claims that could impact the US dollar and government yields markets.

Initial Jobless Claims declined week-over-week

In detail, initial claims are new jobless claims filed by US workers seeking unemployment compensation.

The report has been published weekly since 1967. It also includes a separate count of workers receiving unemployment insurance benefits, known as continuing claims. So, the initial jobless claims measure emerging unemployment, and the continued claims data measure the number of people still claiming unemployment benefits. 

According to the latest report, in the week ending Feb 11, the advance figure for seasonally adjusted initial claims was 194,000, a decrease of 1,000 from the previous week’s revised level. Additionally, the four-week moving average was 189,500, an increase of 500 from the previous week’s revised average.

The report also included unemployment insurance data, both seasonally adjusted and unadjusted. According to the chart below, the change in initial claims year-over-year stood at 15,000. Meanwhile, the insured unemployment claims in the respective period stood at 18,000.

Also read: CPI Report out – Inflation at 6.4%; What Will Fed Do?

The unemployment stats temporarily curb inflation fears

Generally, the report’s estimates are significant in the market forecast, including the likelihood of a recession. The latter is a slowdown in economic activity, and the Federal Reserve’s chain of interest rate hikes added to the economic stall in its aim to curb runaway inflation.

Labor is a key economic input, along with capital. Thus, it is logical that unemployment would negatively correlate with economic output. The more the companies make and sell, the more employees they need, and vice versa.

Thus, the expected market move is the inverse of the initial jobless claim report. If initial jobless claims are down, the market will often rally upwards. If the initial jobless claims are up, the market may slump.

Crypto analytical platform Ecoinometrics reiterated the position in a recent report. However, the analytics claimed that the coal mine’s unemployment rate is NOT the canary regarding recessions, despite the correlation.

Every time it is the same story. Not much happens until you are in the thick of the recession, and then everything moves fast. […] You are not going to see a massive rise in the unemployment rate until after the economy has really turned sour.

read the report.

Also read: Bitcoin Eyes $25K amid $86M Short Liquidations – But Macro Headwinds Persist.

The report also stated that the rising unemployment also starts posting the economy down, and vice versa.

Thus, the optimistic results from the week ending Feb 11 could stave off the recession fears for a while. However, as mentioned, “things go well until they don’t,” so investors should not get their hopes up just yet, as many macroeconomic headwinds still persist.