Indicators · The labour market
US jobless claims
Normal Downturn signal
The four-week average is 195 thousand a week, -1.1% above its low of the past year (week of 31 Oct 2026).
The rise of the four-week average above its low of the past year is lower than 95% of the readings since 1990.
US recessions Periods when this signal was on
What it measures
New claims for unemployment insurance, averaged over four weeks, compared with their lowest level of the past year.
Why it matters
The earliest weekly measure of layoffs in the US.
When it triggers
Triggers when the four-week average is 25% or more above its low of the previous 52 weeks.
Where it fits
Unemployment starts to rise. The argument predicts: Unemployment starts to rise within a few months of a market crash, and the jobs lost in work exposed to AI are not regained.
Other possible causes. Every recession triggers these signals, and most of the jobs lost are later regained.
A trigger can count as evidence for point 5 of our view, a recession in which spending fails.
The prediction
Open Set 8 Oct 2026
- If we are wrongtriggers, then stops
- Now−1.1%31 Oct 2026
- Start0.5%26 Sep 2026
- If we are right25.0% or aboveby 27 Mar 2027
- Severe87.5%as in 2007–09
If our view is right, this signal triggers by 27 Mar 2027: the rise of the four-week average of new US jobless claims above its low of the past year reaches 25.0% or above. The date comes from the model, in which US unemployment's rise over twelve months is by then larger than 99% of twelve-month changes from 1990 to 2019. A downturn of that size would be expected to show in this measure as well.
If it triggers and then stops being triggered for four consecutive weeks, that counts against our view, which expects a downturn to deepen for several years once it begins. The deadline refers to the period the data cover. If it passes without a reading of 25.0% or above, that counts somewhat against our view.
When the rule was set
The rule was set on 24 Sep 2026, when it was not triggered. Its threshold is chosen by the author.
How often it has been on
Applied to past data at the end of each month from Jan 1990, using only what had been published by then, it was on in 11% of months to 2019 and 16% since 2020. More than six months from any US recession as dated by the National Bureau of Economic Research, it triggered once, in Jun 2023. The rule was set with these years in view, so these figures cannot show how well it predicts.
Past triggers
On the data published at the time, it triggered in Nov 1990, Nov 2000, Jul 2008, Mar 2020 and Jun 2023.
Source: US Department of Labor via FRED.