Thursday, August 07, 2008

Adjusted for the Growth in the U.S. Labor Force, July's Jobless Claims Are Below Average


The top chart above shows initial jobless claims (4-week moving average) and the civilian labor force from 1987 to July 2008. The labor force has increased by 30% since 1987, so the frequent comparisons of today's jobless claims of around 419,500 (4-week moving average, see today's BLS report) to previous periods and previous recessions is potentially misleading (thanks to Dennis Gartman for reporting this).

The bottom graph above (click to enlarge) shows initial jobless claims as a percent of the labor force, to adjust for the increase over time in the population and labor force. July's 0.248% level (383,375 average weekly claims / 154,603,000 labor force) is below the 0.27% to 0.33% range of the last recession in 2001, and way below the 0.30% to 0.40% of the 1990-1991 recession.

Further, today's level of 0.248% is still below the .257% average since 1987. Perhaps the BLS should develop a new measure of unemployment claims, adjusted for the size of the labor force, just like the unemployment rate gets adjusted and reported reported (as a percent of the labor force).

8 Comments:

At 8/07/2008 10:31 AM, Blogger Sophist said...

The thing that matters to me is that there is a double bottom in the graph with immediate reversion to the mean and possibility of a future spike.

Be prepared for high unemployment in the future. Possibly up to 8 - 10%.

 
At 8/07/2008 10:51 AM, Blogger Walt G. said...

Should we also account for the 3 milion or so workers who are forced to work part-time who wish to work full-time (they are often just above the unemployment threshold)?

 
At 8/07/2008 10:56 AM, Anonymous bob wright said...

You would also have to adjust for those who work in the cash economy.

In my small circle of friends, I count several people who work full time for cash - they are not a part of any government count.

Additionally, I know of several who's cash income is greater than their reported income.

 
At 8/07/2008 10:58 AM, Blogger spencer said...

The BLS does actually report the ratio you are suggesting.

the insured unemployment rate is now 2.5%

That is up from a bottom of 1.9% last year.

In the 2000 recession it rose from 1.6% to 2.9%.

So the insured unemployment rate is now about the middle of the rise we saw in the 2001 cycle.

 
At 8/07/2008 11:05 AM, Anonymous bob wright said...

..... and since water boarding is now off-limits, I guess the dirty screws will never get their names out of me.

 
At 8/07/2008 4:22 PM, Anonymous Anonymous said...

What is the median in the second graph?

 
At 8/07/2008 5:10 PM, Blogger juandos said...

Hmmm, had lunch with a long time friend who is a headhunter for engineering slots and he deals predominantly with American companies...

He claims that almost any sort of engineering talent can be placed almost immediately since companies are seriously hurting for such people...

Mechanical and electrical engineering disciplines have between three and five slots open per eligible engineer...

Maybe those part timers should consider looking into 2 year degrees in mechanical and electrical engineering...

 
At 8/07/2008 7:48 PM, Blogger Mark J. Perry said...

For bottom chart:

Mean = .2577

Median = .2562

 

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