Saturday, June 06, 2009

Jobless Claims as Percent of Labor Force Falls for 2nd Month in a Row, First Time Since Early 2006

Using May employment data, the graph above shows Initial Jobless Claims as a Percent of the Labor Force (2005-2009) to reflect the May laborforce of 155,081,000, and the May average for initial unemployment claims (628,450 for the 4-week moving weekly average). That measure of the labor market conditions has now declined for two consecutive months for the first time in more than three years, since early 2006 (see shaded areas in chart above).

See related Scott Grannis post "The Job Storms Has Passed."


At 6/06/2009 11:41 PM, Blogger Robert Miller said...

Now why would someone bother to divide the number of initial claims by the labor force when we already have a perfectly useful measure called the unemployment rate?

Perhaps someone wants to torture 'bad' data until it confesses properly. Nevertheless I'm struck by how long that ratio has been climbing and notice their was several one month declines. I don't see why two months are noteworthy.

Another thing that might explain the drop is that the labor force rose by nearly 700,000 people from delayed retirements and re-entry.

The unemployment rate is rising almost everywhere in the country and continuing claims are at a record high. The rate of those marginally attached is much higher.

At 6/07/2009 12:28 AM, Anonymous Anonymous said...

Is the record exhaustion rate now materially impacting the continuing claims rate?

At 6/07/2009 1:06 AM, Anonymous Anonymous said...

Copy and paste, then read and learn...,000_in_may_smashing_consensus_expectations

Hope this counts as me providing evidence and not simply launching unsubstantiated attacks on anyone in particular.

Although I WILL say First Trust's calls on the economy have been FAR more accurate and reasoned than the doom-and-gloomers' here.

At 6/07/2009 1:37 AM, Anonymous Anonymous said...

I keep forgetting that you can't paste links here...I wish I was tech-savvy enough to know how Anonymous1 linked the exhaustion rate page to his post the way he/she did.

Anyway, just go to, click on the "Research and Commentary" link at the top, then click on Brian Wesbury's "Economic Research and Advisory" link, then click the 6/5/09 post under "Data Watch."

At 6/07/2009 2:18 AM, Blogger DaveinHackensack said...


Take thirty seconds and google a list of basic HTML tags (by "basic", I mean this stuff was basic in the 1990s, and I'm no tech savant). Creating a link isn't hard. Here's the link to the First Trust piece you mentioned:

"Non-farm payrolls declined 345,000 in May smashing consensus expectations"

At 6/07/2009 2:59 AM, Blogger OA said...

Seems to me we were promised a huge cascade of unemployed folks due to the automakers going bankrupt. Guess that was a lie and we just pissed away billions.

At 6/07/2009 9:47 AM, Blogger Alan said...

1:06 anon

totally agree on First trust. they are, with carpe diem, among the first places I go to in the morning.

I do think that people have confused views over what caused this recession and how we are likely to come out of it, and believe that first trust has been more accurate than most at diagnosing and predicting what will happen next.

At 6/07/2009 11:01 AM, Blogger Robert Miller said...

Assessing the damage from a plane crash and recognizing the potential for more crashes from the same cause and other causes is neither 'doom and gloom", pessimism, schadenfreude, or a warning not to fly.

Neither is a candid assessment of the data and conditions right before our eyes about this financial and economic crisis. The damage is catastrophic and ongoing. The policies which created this are not only continuing, they are being used as the cure. Many other policies and financial time bombs have yet to explode. I hear the ticking. Some people are too busy celebrating isolated good news, bad news in sheep's clothing, and market and index upticks as a recovery. I admire optimism and positive thinking. Much good can come from bad times. It is a good time to buy lots of things low.

But remember the warning of Dread Pirate Roberts:

"Life is pain, Princess, and anyone who says differently is selling something."

At 6/07/2009 11:26 AM, Anonymous Cheech (in) Marin said...

You people are joking aren't you? Please say this is an Onion article. 350,000 MORE people just lost their jobs and because it wasn't as bad as some "consensus" said it was going to be you're all having a recovery party?

Rob is right. I see the same data he sees and things are bad. Even if we have a GDP recovery this year employment will remain low for at least another year. CRE properties are defaulting at record high rates. Hotel REVPAR is in the basement. Vacancy rates for all CRE are forecasted to rise through 2011. The chart showing Alt A and Option ARMS recasting in the next two years is shocking. All these optimistic reports remind me of the propaganda of 'the war will soon be over and we'll be home by Christmas.'

Quoting Princess Bride, Rob? LOL That one is probably true. I wonder what First Trust is selling. Our conference calls with SNL and RCA weren't so rosy.

At 6/07/2009 4:26 PM, Anonymous Anonymous said...

I wonder what First Trust is selling.

Media time. Wesbury is a Kudlowesque shill. Case in point. Why do you think Perry links to Wesbury's commentaries? As a stock market strategist/economist, Wesbury lost a ton for his clients.

But the more important issue is: when will Bob Gordon eat his own medicine? Look at all the steroid induced heavy lifting the rail carriers are doing. LOL

At 6/07/2009 6:40 PM, Blogger Robert Miller said...

Oh my God! I literally choked on my soda when I read Wesbury saying unemployment "blipped up" 5 percent. This guy has no idea how devastating that is. That's not 5%- it's 500 basis points!

Then he compares this with the Great depression which is like saying the firebombing of Dresden was comparison to Nagasaki. Compared to every post-war recession this is the worst. Bear in mind I was the last person to call this a 'recession' - not beginning until third quarter 2008. The horrendous damage of the affordable housing bubble had already been done but the economy hadn't felt the sting until then.

Wesbury knows nothing about economics. Nearly everything he wrote in that piece is fallacious, irrelevant or flat out wrong. Why save the weak financial sector? To prevent the drop in money supply and deflation he talked about.

As a Kentucky economist once said to me, "He's obviously got a dog in this fight." I'm a non-partisan government economist with all my money in S&P index funds. I have every confidence in the long run for our economy. I'm very disturbed (for others) about short run prospects for employment, banks, CRE, and federal and state budget deficits. I'm also worried for myself about rising taxes and inflation. Wesbury is just plain ignorant.

At 6/07/2009 6:59 PM, Blogger Benjamin said...

It does look like the worst is past. And people have been hurt by this. People who did their jobs and got fired.
For one, I am not worried about inflation, One, we could use some, to diminish the huge amounts of debt out there. It will help us deleverage.
Secondly, a lot of sectors of the economy, such as wages and real estate, seem to be in deflation.
Can't they get those printing plants going any faster?
And thirdly, when a nation is overleveraged, it makes no sense to shrink the economy. We need a larger economy to pay down the debt monkey.
And fourth, we need an R-Party Congress like the one we had after WWII. They jacked up the top federal tax rate to 90 percent, and we paid down the debt. The economy grew nicely in the 1950s, and inflation was low.
(TV buffs: There is an 1950s-era episode of Twilight Zone, original Sterling version, in which a couple breaks a vase and a genie comes out, and they ask for a million dollars. At the end of the show, the IRS takes 95 percent of it. The couple accepts their fate without any whining, decides true happiness is being with each other. It was a different era. Profoundly conservative, by the way.)

At 6/07/2009 7:48 PM, Blogger Dave Narby said...

This is a bad joke which gets worse.

The pumping of the economy on this blog has risen to CNBC levels. Of course, we should cut them a bit of slack, as they *are* going by the official numbers.

At 6/08/2009 3:16 AM, Blogger DaveinHackensack said...

Every time Dr. Perry posts some positive data about the economy, however tentative, some commenters here seem to attack his motives or his credibility. Why? I realize that many are pessimistic about our economic prospects, often for good reason, but one can be a pessimist while still objectively acknowledging positive economic data. Why not acknowledge that an economic recovery is likely by the end of this year, while pointing out the potential problems that lay ahead (e.g., a double-dip recession, stagflation, a decade of below-trend economic growth, etc.)?

At 6/08/2009 11:50 AM, Blogger 1 said...

Not to worry folks, we'll look back fondly on when unemployment was ONLY 9+%...

Obama's upcoming huge tax on the productive class in this country will make us all nostalgic for a mere 9+% unemployment...

At 6/08/2009 2:34 PM, Anonymous Anonymous said...

Every time Dr. Perry posts some positive data about the economy, however tentative, some commenters here seem to attack his motives or his credibility. Why?

He is motivated to appear on the Larry "goldilocks" Kudlow show (I suppose that the mancession meme is the latest incarnation), just like Wesbury, and his credibility is in tatters due to his poor forecasting skills one month prior to the NBER determined peak.

Heh, other than that, I think it's cool that he arranged for some Michigan MBA students to tour Russia on a field trip. It seems to me that he is an okay guy, just don't rely on him if you are reality challenged.

At 6/08/2009 2:36 PM, Anonymous feeblemind said...

re Dave in Hackensack: Thanks for the comment about posting links. I can't do it either. Usually. Maybe I can figure it out now from one of the google links. Doggone it, I have never even figured out how to make a new paragraph in any of these comment sections. Perhaps now I will be able to educate myself.

At 6/08/2009 2:46 PM, Anonymous Anonymous said...

At the same time, government payrolls INCREASED 120,000.

At 6/11/2009 4:52 PM, Blogger Robert Miller said...

Every time Dr. Perry posts some positive data about the economy...

When has he posted bad news about the economy? Is it all sunshine and rainbows? It would be refreshing if once, even once, there was a caveat or precautionary statement.

Ok, ok, when I come to a blog entitled "Carpe Diem" I expect a generous helping of positive thinking. If you're a buyer or investor, there are fantastic bargains out there right now. If you are an economist, you can jump for joy at markets "correcting".

But markets "correcting" and "releasing" labor comes at a huge cost. More than $1.4 trillion of net worth was wiped off the balance sheets of Americans in 1st quarter 2009. Another $1 trillion is an additional mortgage on our future income from debt.

The threat to our financial system from debt defaults is not over, and many say it hasn't even yet begun. CRE and Alt-A defaults are just over the horizon and closing fast.

I really enjoy reading his posts and my agreement is usually voiced by my silence. I try to be complimentary when I can. Some of the Panglossian nonsense, though, forces me to heave my jaw off the floor.

In a year or two we may look back at this point in time and say, "Yep, he was right." Or maybe he's only as "right" as correctly calling the toss of a coin. Your predictions coming true is a necessary but not a sufficient condition for the validity of your forecasting methods.

I, on the other hand, am not forecasting or looking at leading indicators of dubious validity. I'm looking at market fundamentals and exposure to risk which are decidedly negative in the short-run outlook.


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