Thursday, February 21, 2013

A warning from the unemployment line

The weekly initial claims for unemployment data was released today and it is getting close to being a concern of mine.

Year over year change, initial unemployed claims - Source Federal Reserve
As can be seen from this chart of *non seasonally adjusted and *4 week average of seasonally adjusted data, (the noisiest and smoothest interpretations of this data series) the rate of decline has effectively stopped. Yes there were some spikes upwards during the hurricane Sandy and blizzard Nemo, but the trend has started to move upwards after spending most of 2011 and 2012 fluctuating around an annual decline in jobs  unemployment claims of ~40,000.

We are now near the break-even mark and if it starts to consistently go positive, (more people laid off now as compared to last year) this would be a very strong warning flag to the US economy.

Considering the recent payroll tax hike and other tax increases recently imposed it is possible we may see this happen.

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