Rethinking the Value of Initial Claims as a Forecasting Tool

Abstract

The weekly numbers on initial claims for unemployment insurance convey key information about the labor market. But how reliable are claims in predicting changes in the much anticipated monthly employment report? According to a simple forecasting model, claims consistently send an accurate signal about employment during recessions but not during expansions.

Keywords: initial claims, employment, forecastings, recessions, expansions

JEL Classification: C53, E17, E24