Jobless Claims (4Wk. Avg.) Fall to Lowest Level in 37 Weeks, Down 119,000 (-18%) From April Peak
WALL STREET JOURNAL -- In a positive sign for the labor market, the number of U.S. workers filing new claims for jobless benefits decreased more than economists expected last week. Initial claims for jobless benefits fell by 33,000 to 521,000 in the week ended Oct. 3, the U.S. Labor Department said in its weekly report. The last time initial claims were this low was on January 3.
The four-week moving average of new claims, which aims to smooth volatility in the data, also fell by 9,000 to 539,750 from the previous week's revised figure of 548,750. The last time the four-week moving average was this low was on January 17 (see top chart above).
Economists at JP Morgan Chase & Co. wrote in an economic analysis last week that claims generally appear to be on a downward trend, but the pace at which they are falling is a bit sluggish. "The drop has been somewhat slow relative to other large recessions," the economists wrote last week. "Initial jobless claims have fallen 18% in the 26 weeks since they peaked. In the same time span, jobless claims fell by 23% after the 1975 recession, 33% after the 1980 recession, and 29% after the 1982 recession. Claims are usually a good predictor of employment, and the slowness of their decline could indicate a sluggish recovery in the labor market."
MP: From the early April peak of 658,750, jobless claims (four-week average) have fallen by 119,000 (-18%), and that measure of jobless claims has fallen in 20 out of the last 26 weeks. It's also interesting that in the WSJ article above, the Chase economists didn't mention the two most recent recessions of 1990-1991 and 2001. During those two recessions, jobless claims fell by a comparable amount, by -15% from the March 1991 peak and by -19% from the October 2001 peak (see bottom chart above).
14 Comments:
It is interesting that they didn't mention the two most recent recessions, since that would seem to bolster their argument. Both did have similar declines in unemployment numbers, and both had somewhat sluggish job recoveries.
John: It would seem the opposite, that the 2 most recent recessions weaken their case, not strengthen it. The current drop of -18% is very much like the last two recessions.
*off topic, sorry about that*
Mark,
Here is a story you should like, about UK healthcare
http://www.mirror.co.uk/news/top-stories/2009/10/08/give-me-a-break-115875-21731337/
I hope we do not reach the level of unemployment we reached in 1982-3, which I believe was 10.2%
In looking at these numbers which reflect net changes to unemployment, what concerns me is the composition of total unemployment: The portion of unemployed in 1983 which exceeded 27 weeks never exceed 2.7% of the workforce; as of September 2009, the number has exceed 3.5% of the workforce.
This may be sectoral, I haven't checked, and may be those involved in construction and house financing. I do know that about 1/5 of the September unemployment was from state and local government layoffs that were not saved by the stimulus program.
The current drop of -18% is very much like the last two recessions.
Mark:
I agree with. However, perhaps I'm misunderstanding, but in the article they seem to argue that a slow decline is associate with a sluggish recovery. I guess it depends on whether you consider the last two recoveries to be "sluggish." They were both called "jobless recoveries" for a while, because people had the impression that it took until quite a while out of the recession for jobs to pick up.
Certainly if you believe that one or both of the last recoveries were not sluggish, then it vitiates their argument.
John Thacker said:
However, perhaps I'm misunderstanding, but in the article they seem to argue that a slow decline is associate with a sluggish recovery. I guess it depends on whether you consider the last two recoveries to be "sluggish."
You are conflating the the course of GDP and employment. Of course they are related, but around inflection points they behave differently.
For employment, if the rate of job destruction declines slowly, then the employment rate must be slower to recover than if job destruction declined more quickly. This is a matter of definition, not perception.
Man, oh man, I hope this recession is over, and we start minting jobs again in America--good paying jobs.
I just a read a chart that indicates weekly average pay is below 1964 levels, adjusted for inflation.
How is it that more than 5 decades of growing international trade, and huge increases in worker productivity, have led to lower worker pay?
I don't get it. It is the opposite of what I would expect.
Meanwhile, these mercantilist nations are leapfrogging past us.
It ain't fair. Don't they read the textbooks?
"You are conflating the the course of GDP and employment. Of course they are related, but around inflection points they behave differently."
No, I'm talking about employment because the theory offered in the WSJ concerned employment:
"Claims are usually a good predictor of employment, and the slowness of their decline could indicate a sluggish recovery in the labor market."
Hence, what applies to their theory is not GDP, but the labor market.
So at this rate of decline, initial claims will be back to "normal" in June, 2010.
That's IF the rate of decline doesn't slow down, which is always does in a recovery. Initial claims took 127 weeks to return to normal (320,000) in the last recession. It's already been 27 weeks since the peak initial claims in this recession. June 2010 would be a claims recovery of only 62 weeks. If this recovery takes as long as the last one, we won't see 320,000 claims until September 2011. This one could very well take longer.
Forget about initial claims which are constrained by eligibility. We've seen no end to employment losses yet.
it may be that the trend toward jobless recoveries is a result of offshoring all jobs that can be, then hiring illegal and H1b/L1 immigrants to fill the rest.
IF this is the case, we'll be looking at worse employment numbers than in the 2003-2007 'recovery'. at least then we had the housing bubble to generate jobs. this time around, its hard to see where the jobs will come from.
i hope i'm wrong.
i saw this in another blog :
"Sending your working class against nations that are executing aggressive industrial policies is like sending troops marching upright in ordered ranks into heavily entrenched machine gun fire."
Thanks for sharing this information.
Bobble,
Cute analogy but hardly applicable. Do you or anyone else think that China's 1.3 billion people, India's 1 billion people, Indonesia's 230 million people and Brazil's 192 million people were going to remain idle forever?
All that impoverished labor potential had to be tapped sometime. It has nothing to do with those countries "unfairly" developing. Our nation had centuries of government incentives for development.
Our challenge is to build human capital within our own work force and let Indians work in textile factories for 12 hours a day. Brazilians can work in iron mines, the Chinese can make injection-mold plastic toys, and Indonesia can do whatever the hell Indonesians do.
Quit harping on unfairness as the cause of our problems. Life isn't fair. That doesn't excuse you from living it to the best of your ability. Our kids are more interested in playing with video games than writing them or making the components for them. We've become a nation of whining, entitled, slackers letting hip hop, video games, text messages, vampire films, and Happy Meals destroy our minds and bodies.
Soylent Red said...
That dodges the questions Bobble asked about H1-b/L1 (...and PERM) fraud.
My question is why one would have to go to great lengths to avoid US workers even if they could indeed do the job? It's not as if you can just write job descriptions that can't be met, have criteria that (indirectly) discriminates against US citizenship, lie to your workers about who those "additional help" are and otherwise remove work at a faster-than-natural pace.
Oh, wait. They can and have, thanks to lax enforcement and intimidation of H1-b workers and displaced citizens. The GAO documented this well before 2003, the year offshoring referred less to oil drilling and more towards job dislocation.
Why would there be such a desire to bypass citizens and lie to them about offshoring and "body shop" outsourcing?
Fix that first and stop the fraud that you conflate with a complete lack of competitiveness for places where people get their first jobs and experience. Otherwise stop complaining about a problem you helped create.
Oh, and if you're just some BPO that's on a power trip (all too common), think of when you're no longer a jobs funnel destination.
soylent red: "Quit harping on unfairness as the cause of our problems."
quit putting words in my mouth. i never said anything was "unfair".
the implication of my analogy is that our global trade strategy is not well thought out. its going to generate ever larger unemployment and underemployment.
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