Unemployment Claims Over 400K

First a correction: last week I mentioned that historically weekly claims increase after Congress passes an extension to unemployment insurance benefits. In the past, workers who had exhausted their benefits could reapply for extended benefits, and these workers were included in the first time claims report.

Although the above was true during previous downturns, the DOL BLS has apparently changed their methodology and the extended benefits are not included in first time claims anymore.

So the jump to 400K first time claims is not the result of Congress extending benefits (and it would be too soon anyway).

Here is the current report from the Department of Labor for the week ending June 28, showing initial unemployment claims increased to 404,000, and the 4-week moving average was 390,500.

This graph shows the weekly claims and the four week moving average of weekly unemployment claims since 1989.

The four week moving average has been trending upwards for the last few months, and is now at 390,500 - solidly above the possible recession level (approximately 350K).