Current Issues in Economics and Finance
Rethinking the Value of Initial Claims as a Forecasting Tool
November 1998 Volume 4 Number 11
JEL classification: C53, E17, E24

Author: Margaret M. McConnell

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.

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