Adjusted Jobless Claims Suggest Recession Ended
The September employment report 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 September labor force of 154,006,000 and the September average for initial unemployment claims (559,625 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 to 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 .059% reduction in adjusted jobless claims from the March 2009 high of 0.4226% to 0.3634% in September follows the same pattern of 0.05%-0.06% 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 0.3634% for jobless claims as a share of the September 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).
See a very similar analysis here from Scott Grannis, who alternatively calculates jobless claims as a percent of payrolls with the exact same graphical pattern presented here using jobless claims as a percent of the labor force (slightly different denominator, but same numerator, and same story).
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 .059% reduction in adjusted jobless claims from the March 2009 high of 0.4226% to 0.3634% in September follows the same pattern of 0.05%-0.06% 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 0.3634% for jobless claims as a share of the September 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).
See a very similar analysis here from Scott Grannis, who alternatively calculates jobless claims as a percent of payrolls with the exact same graphical pattern presented here using jobless claims as a percent of the labor force (slightly different denominator, but same numerator, and same story).
10 Comments:
alternately, the numbers may be considerably off because the adjustments being made are far wide of the mark and systematically under-estimating job losses.
http://www.bloomberg.com/apps/news?pid=20601110&sid=aXoQJ14iSlWg
The trend was pretty decent until the latest report which spiked higher. I hope this is just a rare occasion and the trend downward continues.
They say the stimulus money yet to be spent. The Fed is still pumping money, and the cheap dollar ought to help.
I just hope the dollar keeps sinking, sinking to hell. We ought to print a lot of money, inflate our way out of the debt jail we are in, and also make American goods cheap, and our country cheap to take a vacation in, for wealthy dudes from around the world.
Maybe we need a commercialized sex industry to attract tourists. I don't know that we have that much else to offer. Our cities are ugly, our culture is second-rate. I mean, who is going to go to Detroit for vacation?
Inflation would ease burdens on landowners too. Seems like a win-win to me.
With a dose of truly free enterprise (a national chain of high-quality, low-cost brothel-hotels) and cheap money, we can work our way out of debt.
another view of job losses, the graph compares the job losses from the start of the employment recession in percentage terms.
something else to consider. add about a million persons to the unemployment totals.
the BLS is completing its annual data sync between the business survey data that it uses for the monthly payroll announcements and the more accurate counts from state unemployment insurance claims.
based on that, the BLS announced friday that it has understated unemployment numbers by 824,000.
from calculated risk
Bobble, regarding your graph, it should be noted U.S. real GDP growth peaked at 4.9% in late '07, which is a high level, and fell sharply in late '08 after Lehman's collapse.
The "Great Recession" was in the 1970s, i.e. the Fed prevented a deep depression, in 1970-82, similar to the 1870s and 1930s. Of course, poor fiscal policies can worsen recessions.
If Harry Reid can take the Max Baucus's health care tax increase bill and the public option and attach it to the TARP tax increase bill and get the House to pass it, and then add in the retiring Bush tax cuts, then the US economic down turn is just beginning.
peaktrader:". . . regarding your graph, it should be noted U.S. real GDP growth peaked at 4.9% in late '07, which is a high level, and fell sharply in late '08 after Lehman's collapse."
does this mitigate the percentage and duration of job loss trend?
how so, considering the low job creation of the last decade
?
Benny said:
"Maybe we need a commercialized sex industry to attract tourists. I don't know that we have that much else to offer. Our cities are ugly, our culture is second-rate. I mean, who is going to go to Detroit for vacation?"
Don't sell yourself short. Some of our most enjoyable holidays have been spent in the US. The beautiful national parks were wonderful and most people much friendlier than elsewhere. For a second rate culture its been pretty successful - it is hard to go anywhere these days without seeing some US cultural influence.
I've seen Benny's mother and sisters and believe me, there is no money to be made there.
The change should be looked at from a "peak to trough" perspective in terms of its impact upon the workforce.
In this view, the negative change is about .25 % which is on par with the negative change in the prior harsh recessions.
This viewpoint gives us a better perspective on why this job market is so damaging to the psyche of the average worker.
As others have pointed out using U6 unemployment data (17% rate) gives us a more accurate view of the current and future job market.
The average person doesn't care if there is a "statistical recovery" from recession they care about having a job.
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