Adjusted Jobless Claims Suggest Recession is Over
With July employment data now available, the graph above of Initial Jobless Claims as a Percent of the Labor Force (1974-2009) has been updated to reflect the July labor force of 154,504,000 and the July average for initial unemployment claims (574,900 for the 4-week moving weekly average). This measure of initial jobless claims, adjusted for the size of the U.S. labor force, shows that jobless claims peaked during this recession above the levels of the last two recessions (1990-1991 and 2001), but were never anywhere close the levels of the previous three recessions in the mid-1970s and early 1980s (see chart above). In other words, this recession was worse than the last two, but not nearly as severe as the previous three, using this adjusted measure of jobless claims. Additionally, the sharp .05% reduction in adjusted jobless claims from the March 2009 high of 0.4226% to 0.3721% in July follows the same pattern of .05% reductions in adjusted claims at the end of the 2001 recession (a .052% reduction from .3318% in October 2001 to February 2002) and at the end of the 1990-1991 recession (a .058% reduction from .3915% in March 1991 to .3327% in July 1991).
See related post by Scott Grannis here, who reports that this type of reduction in job losses as a percent of the workforce suggest that the recession ended in June.
5 Comments:
The NBER BCDC doesn't consider initial jobless claims in its business cycle deliberations:
Because a recession is a broad contraction of the economy, not confined to one sector, the committee emphasizes economy-wide measures of economic activity. The committee believes that domestic production and employment are the primary conceptual measures of economic activity.
The committee views the payroll employment measure, which is based on a large survey of employers, as the most reliable comprehensive estimate of employment.
Initial claims are one thing. but what about explodng continung claims and exhausted clains (over 27 weeks).
The labor force falls by 422,000 people in one month and we're supposed to believe a recovery is underway?
Unless you show us that 422,000 people in the labor force were locked up in prison, moved abroad, joined the military or died (net of replacement), this is an ominous sign. Over 400,000 people just GAVE UP looking for work in one month!
Could someone be seriously 'over adjusting'?
From the Bureau of Labor Statistics we have the following:
Table A-12. Alternative measures of labor underutilization
U-6 Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers...
1 - You highlight the "total unemployed" as if U6 was that, but it isn't. Its total unemployed, plus part time workers who are employed plus others.
- Tim
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