Posted by Marcelo Perez

The number of people filing for first time unemployment benefits is trending to a 26-year high in the latest week, according to the US Department of Labor. For the week ending December 13th, initial jobless claims fell by 21,000, to 554,000. This was a mild surprise, as economists were expecting 560,000-570,000 new claims for the week. Initial claims running consistently atop the 350,000 mark would signal some weakening in the labor market. Claims above 400,000 are seen by many as a signal of recession.

Having witnessed extremely volatile measurements in the past few weeks, it is wise to consider the four-week moving average of initial claims, which smooths out one-time factors such as bad weather or holidays. The four-week average continued its trek upwards, gaining 2,750 to 543,750. It’s at its highest level since late 1982.

It is pretty obvious now that businesses are laying more employees off, and at a faster pace, and that the unemployed are having a tougher time looking for a replacement job. A year ago, initial claims were at 349,000. And initial claims are not expected to drop again until mid-January, according to the Labor Department.

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