One closely watched macroeconomic data point that is receiving more attention than usual is Initial Weekly Jobless Claims. Many investors follow the monthly job data such as ADP Private Payrolls, the Unemployment Rate, and change in Nonfarm Payrolls. However, in times of economic crisis we believe it is important to increase focus on the weekly data as well.
While reported weekly, investors frequently focus on the 4-week moving average to create a smoother “curve” to track the trendline. As of last Thursday, 4/17, the 4 week moving average was 5,786,500. On March 13th, the number was 232,000.
To put this number into perspective, initial weekly claims peaked in the Global Financial Crisis of 2008/2009 on 3/27/09 and was 659,250. This is why you may have heard comparisons of the current situation to the Great Depression by some in the financial media. The magnitude of the change is truly breath-taking in both absolute terms, and relative to the last recession.
This week’s data will come on Thursday 4/24. The Reuters Poll is for 3,500,000 new claims. If this number is accurate, the data point that this will replace is 6,867,000, and will bring the 4 week moving average to 4,944,750.
This could have a dual effect on investor sentiment: Both the peak of the “curve”, and bringing the 4 week average below a psychologically important threshold of 5,000,000 claims.
Call us today to discuss how this might impact your strategy in this challenging environment.