The likelihood of the United States slipping into a recession has increased, due in part to the mini-banking crisis and recent data pointing to the toll of the Federal

Reserve's tightening cycle. The focus this week is on labor market indicators.

On Thursday, a report is expected to show a rise in weekly jobless claims to 200k in the week ending April 1, up from the prior week's 198k. However, economists at Goldman Sachs warn that initial jobless claims could jump, taking into account the distortions in seasonal factors. The bank believes that initial claims could jump to over 240k, with a possible illusory increase in reported initial claims over the next few months.

Goldman Sachs notes that these figures, rather than reflecting genuine changes in the pace of layoffs, have instead shown distortions to the seasonal adjustment factors caused by extreme volatility during the pandemic over the last year. If this problem is not corrected in this reading of jobless claims, then Goldman Sachs expects to see a much more modest increase in the 200k to 210k range.

Jobless claims are only the tip of the iceberg compared to the monthly reading of the U.S. Labor Department's non-farm payrolls data. Expectations for March are for a rise of 239k, down from February's 311k increase, while the unemployment rate is expected to remain unchanged at 3.6%. The release lands on Friday, when U.S. stock markets, and most markets around the world, are shut for Good Friday.

"The fact that the U.S. jobs data, which is the most watched data point in the entire world, is scheduled on Good Friday is disquieting," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. "For those markets that will still be up and running, the trading volumes will be thin, therefore the price action posterior to the data will likely be exacerbated by the lack of volumes." Photo by Phil Whitehouse, Wikimedia commons.