ROLLING CLAIMS CONTINUE TO IMPROVE

The 480k print this morning marks a small step back from the 457k and 462k levels two and three weeks ago, respectively, but the volatility of weekly initial claims numbers makes it necessary to focus on rolling claims. We use a four week rolling average to smooth out that volatility.

The rolling average claims improved further this week to 468k from 473k last week - an improvement of 5.2k, and in-line with the slope of 5.3k/week since March (8.3 months of data). We are keeping a close eye on this metric as rolling claims are the leading indicator for ongoing recovery in the economy and, by extension, the loan books for consumer lenders.

ROLLING CLAIMS CONTINUE TO IMPROVE - 2

For those wondering how to interpret a possible inflection in rolling claims in coming weeks, should there be one, we would suggest using a positive slope of 7.2k/week as an outer risk band. This is the fastest weekly rate at which rolling claims increased over a two week period since the trend of improvement began in March. Alternatively, in the absolute, one can use 490-495k as a rolling upper limit based on the downward channel that's been in place since March.