Today’s update on jobless claims strengthens the case for arguing that the Great Recession is over.
New filings for unemployment benefits dipped 5,000 to a seasonally adjusted 457,000 for the week through November 28–the lowest since September 2008, the Department of Labor reports. The obvious caveat is that last week’s number is skewed to the downside because of the Thanksgiving holiday, which undoubtedly delayed and otherwise deterred the newly unemployed from paying a call to the local unemployment office.
But while should be suspicious of last week’s data point, there’s no uncertainty about the broader trend. As our chart below shows, jobless claims have been in decline since peaking in March. That alone doesn’t tell us that the economic contraction is fading, but it drops a rather large clue for thinking so when considered with a range of other economic indicators.
Anticipating the end of the recession based on looking at a general retreat in new jobless claims is a familiar notion on these digital pages. In the spring we argued that a peak in jobless claims would send a potent signal that the end of the recession was near. Calling peaks in real time is, of course, the stuff of guesswork. But now we can look back with confidence and say that new filings did indeed top out in late March of this year. That and a number of other encouraging macro signals, including the rally in the stock market, all but confirms that the recession has ended.