US initial jobless claims fell to 202,000 last week, the lowest level in 49 years. Not only does this underpin the view that the US labour market is still in very good shape, it also means one recession indicator has stopped flashing red for now.
As today’s chart shows, initial jobless claims tend to bottom out well in advance of a new recession. Until yesterday, it looked like that bottom had been reached in early September last year, which based on historical data implied the US had already moved almost seven months closer to a recession. But last week’s initial jobless claims figure has changed that, now suggesting a recession is still further out.
