Adjusted Jobless Claims Suggest Recession Ended
August employment data was released yesterday, and the graph above of Initial Jobless Claims as a Percent of the Labor Force (1974-2009) has been updated to reflect the August labor force of 154,577,000 and the August average for initial unemployment claims (568,900 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 .056% reduction in adjusted jobless claims from the March 2009 high of 0.4226% to 0.3662% in August 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).
Finally, the current level of 0.3662% for jobless claims as a share of the August labor force is above the level at the end of the 2001 recession, but is very close to the levels that marked the ends of the four previous recessions (see dashed blue line in graph above).
As Scott Grannis reported last month, this type of reduction in job losses as a percent of the workforce suggest that the recession probably ended in June.