Although we are not technically in a recession (that we know of), one indicator that is clearly recessionary is jobless claims. This morning, The Labor Department said that new applications for unemployment benefits rose 7,000 to 455,000. This is a high number and anything above 400,000 is generally perceived to indicate economic weakness. Various economists expected the number to come in around 430,000. The all-important four-week moving average rose to 419,500, which is the highest in over five years.

This shouldn’t be too surprising as the monthly employment report has shown job losses for seven straight months with the cumulative total reaching over 460,000, and what seems like a fresh new round of announced layoffs daily. The weak labor market is one of the key reasons the Fed isn’t raising rates now. We believe that housing prices are a huge factor in contributing to labor weakness. Once prices stabilize, the labor market will improve. We aren’t there yet.