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David Sims is the managing member of RidgeHaven Capital LLC. We prefer distressed equities and value investing. David is Certified Public Accountant and previously worked as a Series 7 licensed stock broker, auditor at a Big 4 accounting firm, general ledger accountant and systems administrator... More
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  • Initial Claims 4-Week Moving Average At 7-Year Lows 0 comments
    May 29, 2014 9:21 AM

    The big news this morning, eclipsing the downward revision on 1st Quarter GDP, is the fact that initial claims data hit 300,000 last week. And most importantly, the 4-week moving average of claims is at a 7-year low.

    Adding layers of complexity is the news that GDP contracted due to slower than expected inventory growth. This is all setting up to create an inflationary trend in the second half of the year, caused by labor gains, economic growth, and draw-downs on inventory.

    10 Year View of Claims Data

    US 4-Week Moving Average of Initial Claims for Unemployment Insurance Chart

    US 4-Week Moving Average of Initial Claims for Unemployment Insurance data by YCharts

    5 Year Chart

    A closer view of the data over a 5 year period shows the obvious downtrend, post-recession.

    US 4-Week Moving Average of Initial Claims for Unemployment Insurance Chart

    US 4-Week Moving Average of Initial Claims for Unemployment Insurance data by YCharts

    Reading into this data, one might also want to look at the year to date data and compare this to weak GDP results. The most recent revised GDP figures from this morning show contraction in the economy with -1.0% GDP growth. Meanwhile claims data continued to drop.

    US 4-Week Moving Average of Initial Claims for Unemployment Insurance Chart

    US 4-Week Moving Average of Initial Claims for Unemployment Insurance data by YCharts

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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