Sunday, July 05, 2009

Jobless Claims as Percent of Labor Force Fall for 3rd Month in a Row, First Time Since Early 2006

With June employment data now available, the graph above of Initial Jobless Claims as a Percent of the Labor Force (1975-2009) has been updated to reflect the June labor force of 154,926,000 and the June average for initial unemployment claims (618,187.5 for the 4-week moving weekly average). That measure of initial jobless claims adjusted for the size of the labor force shows that we are currently above the levels of the last two recessions (1990-1991 and 2001), but still far below the levels of the previous three recessions in the mid-1970s and early 1980s.

For current initial jobless claims to reach the peaks of the 1970s and 1980s of about .60% (see chart above), we would have to have initial jobs claims today of about 929,000, or 50% above current levels. By this measure of the employment situation, it seems unlikely we'll get anywhere close to the recessionary levels of the 1970s and 1980s.

12 Comments:

At 7/05/2009 2:08 PM, Blogger Jeff Herron said...

Of course the high jobless numbers in the 70s and again in the early 80s were relative *spikes*. Let's wait and see if the initial jobless claims in this recession actually go back down anytime soon.

Initial jobless claims of .3% or .4% sustained over a series of many months are still a whole lot worse than a brief spike of even a much higher percentage.

Given June's rise in initial claims, it is still anybody's guess whether we'll see declining joblessness rates in the near future.

 
At 7/05/2009 2:24 PM, Blogger Robert Miller said...

First of all, these two series are each seasonally-adjusted using the X-12-ARIMA method which means each data point is meaningful ONLY when compared with other data points in its own series. Forming a ratio between two different series adjusted with different autoregressive models is NONSENSE. If you want to do it properly, you first calculate the ratio using non-seasonally adjusted data and then seasonally adjust it.

Next, you're talking about that tiny little dip? That itty bitty hangnail in a 34 year series? Is that change even statistically significant given the margin of error in labor force estimates?

But if you still have faith in this bogus chart, look at the previous recessions. It took two to three years to get back to the trend - and this recession is the worst of all of them. So we can expect to be back to normal in, oh, 2011?

Did you even bother to read the BLS report as you culled the data for this chart?

The unemployment rate rose 10 basis points over the month to 9.5%.

The number of unemployed persons rose by 218,000 in that one month. The number of employed persons fell 374,000 during that month.

The number of people who are no longer in the labor force increased by 358,000 from May to June. The number of discouraged workers is now about 800,000.

Over the month employment:

Total nonfarm: DOWN
Manufacturing: DOWN
Construction DOWN
Business Services: DOWN
Retail Trade: DOWN
Financial Activities: DOWN
Information: DOWN
Leisure/Hospitality: DOWN
Government: DOWN

It would be easier to list the sector which added jobs: Health - a measly 34,000 jobs and slower growth than the previous month!

So keep Carpe-ing every Diem for whichever ratios will support the conclusion you've already made.

There's no amount of Kiwi in the world that will polish this turd.

 
At 7/05/2009 6:53 PM, Anonymous Penny said...

God I hate this "peak oil" whining. Why doesn't anyone talk about peak wheat or peak pork?

If we start to run out of easy to get oil its price will rise. People will start conserving it more. The higher price will pay oil companies to explore more and drill deeper. Alternatives will become cheaper.

Germany invented synthetic gasoline back in 1920 something with the Fischer-Tropsch process.

Bottom line, there is no such thing as a "peak oil" problem and there never will be. It's a conspiracy theory dreamed up by crazy people.

The economy rights itself as long as technology can keep up. The price of energy will rise, but we will never "run out" of oil or a viable substitute. New technology might make energy even cheaper than oil.

I'm more worried about "peak fish" as fishermen deplete certain species faster than they can reproduce. The market doesn't correct that problem because higher prices only cause fisherman to want to catch them faster. I would really miss salmon, tuna, and even pollock.

As far as I know, we haven't succeeded in cloning fish yet. When they're gone, they're gone.

 
At 7/05/2009 6:56 PM, Blogger Cheech said...

@Penny

What's peak oil got to do with jobless claims?

A penny for your thoughts.

 
At 7/05/2009 7:01 PM, Anonymous Penny said...

My bad. Posted on the wrong page.

How come everyone gets their name in blue with a link and I don't?

 
At 7/05/2009 8:04 PM, Anonymous Cheech (in) Marin said...

See, I'm back in black. :)

If you input your name in the name/URL block it's black. If you get a Gmail account you can sign in with that and set up a profile if you want. One advantage is that you can stay signed in on your computer and not re-type your name. A better reason is that you can delete stupid things you said, like commenting on the wrong post. :)

Don't feel ashamed. I got my Gmail account right after I made a post I wished I could delete. At least you put in your name. So many people choose Anonymous.

I thought you gave up posting. Haven't seen you in a while. Rob was giving you a hard time?

 
At 7/05/2009 8:29 PM, Blogger bobble said...

"This graph shows the job losses from the start of the employment recession, in percentage terms (as opposed to the number of jobs lost).

The current recession is now the 2nd worst recession since WWII in percentage terms - and also in terms of the unemployment rate (only early '80s recession was worse)."


from Calculated Risk

 
At 7/06/2009 6:37 AM, Anonymous Ralph Short said...

While charts and statistics are useful in any recession I submit we have major problems with recovery in the current recession. The problems are:

1. The amount of debt we are accumulating will require interest payments of approximately 700 billion (@5%) annually. Most of that goes to the Chinese.
2. The Cap and Trade proposal is a tax bill which will further decrease private money going to productive and job creating efforts.
3. The national health care proposal will further increase government's take of the GDP which will again slow real economic growth.

It seems to me we are headed for a long term double digit unemployment rate similar to Western Europe and in order to get reelected we will see politicians initiate more welfare schemes to help the long term unemployed. All of which will further dampen recovery efforts.

 
At 7/06/2009 1:16 PM, Blogger Robert Miller said...

Most of that goes to the Chinese.

No, Ralph, most of that does NOT go to the Chinese. Less than 7% does.

Americans hold about 72% of US Treasury securities. The Federal Reserve, Treasury, the Social Security Trust Fund and other intragovernmental funds hold half of all US debt.

Other holders include state and local governments, financial institutions, pension funds, mutual funds, and other investors. So we are paying 72% of the interest to Americans.

Of the 28% which is foreign held, China holds about 23.4% of that: only 6.55% of the total debt.

Not all of the "Chinese" holdings are the Chinese government. There are, in fact, private entities in China who hold some of our debt.

The amount of our debt concerns me but the nationality of the people who hold it is irrelevant to me. After China, the largest foreign debt holders are Japan, Caribbean Banks, oil exporters, the UK, Russia, and Brazil. Are we worried about those damned ferners too?

 
At 7/06/2009 8:57 PM, Anonymous Ralph Short said...

Robert, I accept your percentages, and no, I really don't worry about all of the other foreigners who hold our debt. In fact, I don't worry about any foreigners holding our debt just like I never worried about Japan buying property here, or setting up auto factories. As far as who or what in China owns the debt I would submit since it is still a quasi communist country the distinction is without a substantial enough difference to me. That is just my own opinion.

More importantly though, I believe the main thrust of my idea is while the stats of this and that relative to the recovery may tell us something about it, the increase of the debt, as well as the increase in governmental influence on manufacturing and financial activities, has a deadening effect.

I still believe our unemployment rate will be double digit soon and will as a result of all of this remain that way until we change our ways.

Needless to say, I could be wrong and in fact hope that is the case.

 
At 7/06/2009 11:14 PM, Blogger Robert Miller said...

I believe...the increase of the debt, as well as the increase in governmental influence on manufacturing and financial activities, has a deadening effect.

In that we are in full agreement. And I apologize, Ralph, for not saying that I agreed with every other point you made in your previous comment. Call it a sensitive peeve of mine to pounce when people suggest China "owns" us. I don't like our nation being in debt, but if we have to be in debt I rather like the fact they are lending us money so cheaply.

I'm a free trader. I know those dollars have to come back here someday otherwise China can't benefit from them.

I despise the ChiCom government and I don't want to see them enriched. If we don't trade with them, we cut off our noses to spite our faces. We get quite a bit of oil from Venezuela. I would probably despise a lot of people I do business with on a personal level if I knew more about them.

Capitalism will be good for China's future and for our relationship with them. I hope and pray their people will demolish the gutter religion of socialism in my lifetime.

I still believe our unemployment rate will be double digit soon and will as a result of all of this remain that way until we change our ways.

Hey buddy, my state is already in double digits and the rest of the country will be there by the end of 2009. I think we'll stay there throughout 2010 too.

I hope I'm wrong, but I don't think so. Job recovery has been getting slower and slower after every post-war recession and, as Bobble showed in his graph, this one is a doozy.

 
At 7/07/2009 3:18 PM, Anonymous Ralph Short said...

Robert, no problem with the foreigner comments. Actually, glad you mentioned the stats on the debt because I went to a site that documented each country. Interestingly, I noticed China has increased their purchase of treasury notes by a couple hundred billion from 2008 to April of 2009. I guess they are banking on our success.

It will be interesting to see how the unemployment rate will affect the voters as well as seeing how long the spin machines can blame it on someone else.

 

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