Chart of the week

Weekly unemployment registrations continue to be released, unlike a number of other statistics in the face of the US government shutdown. The week of January 18 was when they reached their lowest level since 1969 at 199,000, a level all the more remarkable as the active population has doubled in the past 50 years. This has led to the lowest ratio (see chart) since 1967, almost half of the previous lows observed.

OUR ANALYSIS

Weekly unemployment claims are a very good indicator of the business cycle and have the advantage of being a weekly figure. This advantage is however coupled with higher volatility than other indicators and seasonal disruptions. On the other hand, the shutdown has no direct impact since federal employees are covered by a different unemployment benefits program.

History shows that when unemployment registrations begin to recover for good, the following recession generally begins between 9 and 18 months later. The most recent low being inferior to the previous one is therefore particularly reassuring.

The opinion expressed above is dated January 25th 2019, and liable to change

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