The Department of Labor reported today that initial jobless claims for the week ending December 6 hit 573,000 on a seasonally-adjusted basis. The news is certainly unsettling. Nonetheless, even though the number exceeded the consensus estimate by almost 50,000, the stock market gave the report a rather ho-hum reception.
Because the week-to-week initial claims figures can be volatile, economists prefer to focus on the four-week moving average. This average climbed to 540,500. It has risen six weeks in a row. During the previous recession (March to November 2001), the 4-week average climbed five weeks in a row before peaking at 489,250. I suspect, however, that this time we haven't yet hit the peak. The graph above plots the 4-week moving average ever since the 2001 recession began. As you can see, it has been rising sharply since late 2007, and so far shows no sign of leveling off. I really don't think it is alarmist to suggest that the unemployment rate could hit 8-9% by mid-2009.