Thursday, November 18, 2010

Weekly Jobless Claims Fall to 26-Month Low



The Department of Labor reported today that the four-week average of initial unemployment claims fell to 443,000 for the week ending November 13, which is the lowest level since the first week of September 2008, more than two years ago (see chart above).  The number of workers continuing to receive jobless benefits fell to 4,353,250 last week on a four-week average basis, the lowest level in almost two years since early December 2008. 

Although it could be a lot better, the trends in jobless benefits are certainly moving in the right direction, and point to a labor market that is gradually recovering.    

29 Comments:

At 11/18/2010 9:49 AM, Blogger Dr William J McKibbin said...

I suppose that jobless claims are an interesting leading indicator of employment health, I maintain that the employment to population ratio is the better measure of employment health for a nation -- for the record, the employment to population ratio in the US is continuing to decline through last month, and has been trending sharply downward since the year 2000 -- the US is not creating jobs, just shuffling people around and changing the way the "unemployed" are counted -- the US is no where close to entering a jobs recovery based on the employment to population ratio -- more at:

US Employment to Population Ratio 1948-2010

Thank you for the opportunity to comment...

 
At 11/18/2010 10:36 AM, Blogger morganovich said...

i agree with the good doctor.

if the % of the population that is actually working continues to decline, then firings ought to drop just because there is a smaller pool of workers with jobs in the first place.

if there were only 2 jobs left in the US, a weekly claims number of 1 would hardly be good news.

 
At 11/18/2010 11:16 AM, Blogger Hydra said...

I thought the whole idea was to get to the point where we don;t have to work as much.

Maybe part of the employment ratio story is that a lot of old geezers like me don't want to work anymore, and don't have to.

 
At 11/18/2010 11:28 AM, Blogger morganovich said...

hydra-

after a 50 year climb in employment % it seem pretty implausible that right after the worst wealth shock since the 30's that suddenly an extra 6% of the population is ready to retire in the last 2-3 years.

the huge drop in wealth from the market crash would keep geezers working longer, not send them out to the golf course.

 
At 11/18/2010 12:33 PM, Blogger Hydra said...

I was down, like everybody else, but I have long since made back more than I lost.

Buying AIG and BOA for pennies didn't hurt.

 
At 11/18/2010 12:40 PM, Blogger Ron H. said...

I'm assuming that a higher employment to population number(low ratio)is considered a good thing, but how has changing demographics over time affected what this ratio really means? In particular, since the '60s many more women have entered the workforce, chosing careers over housewifery.

There is also the frequently heard lament that one worker per household is no longer enough, and that both parents in a traditional nuclear family must now work to maintain a desired standard of living.

In other words, couldn't more people choosing to work, or a drop in real wages over time create the same rising slope?

 
At 11/18/2010 12:55 PM, Blogger morganovich said...

hydra-

the S+P is still around 23% off the highs, so it's pretty much impossible that most people are not still heavily underwater.

you have to look at the aggregate performance to get a sense of what a typical situation is.

 
At 11/18/2010 1:00 PM, Blogger morganovich said...

ron-

yes. over the long term employment to population ratios are heavily influenced by social mores and wage issues. it's very difficult to compare the number now to the number in 1950.

but it is much easier to compare the number now with the number 4 years ago.

not much has changed in terms of women's attitudes toward work or the nuclear family in the last 4 years. it would also be pretty much impossible to argue that the drop is due to a big wage spike in the last 4 years.

this is the drop in participation of 6% in 4 years is very meaningful.

 
At 11/18/2010 2:23 PM, Blogger Hydra said...

the S+P is still around 23% off the highs,

==================================

But the highs were a BUBBLE. We don't want to go back there.

If I look at my own long term average gain, I'm already ahead of where I'd expect to be.

Anyway, my net worth, and how much of that is avaialable for retirement is not accurately reflected by the S&P.

If people are making their retirement plans based on how well they were doing at the peak, then they may have unrealistic expectations.

 
At 11/18/2010 2:23 PM, Blogger Hydra said...

This comment has been removed by the author.

 
At 11/18/2010 3:25 PM, Blogger morganovich said...

h-

my point is that a lot of people lost a lot of money recently, so your proposition that lots of people have happily retired as an explanation for the drop in workforce participation is highly implausible.

they got killed on their houses too.

are you seriously arguing that people in aggregate are in a better position to retire than they were 3 or 5 years ago?

 
At 11/18/2010 4:01 PM, Blogger Hydra said...

No, of course not.

I was only suggesting as Ron did that there might be other reasons that the fraction of people working has not increased, besides the fact that there is nothing for them to do.

If you retired right at the peak, thinking your book was done, you would be very badly off, now, by assuming the income you had back then would continue.

Likewise, if you got laid off then and took involuntary retirement, you might be seiously hurting.

But, if you dodged the bullet and didn't get killed in financials or housing, and you managed to keep your job, and continued to invest as ususal, instead of retreating to gold or something, then by now you are not in such bad shape. The economy is not killing you.

McKibbens argument is that the headline is misleading, and things are worse off than the headline implies. My experience is that things are not so bad.

I also observe that some poepel will continue tho say the economy is bad, no matter what the evidence says, as long as Obama is president.



That said, boomers are entering the age of retirement, and some won't work any more, some because they have been laid off.



My real question is why do we asssume that work is good, and more workers is good, and more productivity is good? For many, or even most people the goal is simply to work enough so they don't have to.

If that's the case then maybe our government policy is all wrong. We don't know how to keep people out of truoble whe they are not working, so we need to find jobs for them.

Doing what? Making more stuff we don't need and put in the landfill? How much do we continue to increase robotivity and productivity before we conclude that we DON'T WAN'T everyone working.

We can start with the lawyers and politicians, maybe.

Maybe, instead of beating our heads against the wall to find something they can do we can accept the idea that not everyone works all the time, and make the best out of that.

================================

Britain will soon begin “measuring people’s psychological and environmental well-being” — i.e., their happiness. “British officials say there is still hesitation in some parts of Whitehall over going ahead with the programme during such difficult economic times,” reports The Guardian, “but [David] Cameron is said to want to place the eventual results at the heart of future government policy-making.”

Freakonomics

 
At 11/18/2010 4:03 PM, Blogger juandos said...

"...the four-week average of initial unemployment claims fell to 443,000 for the week ending November 13, which is the lowest level since the first week of September 2008"...

Doesn't this just mean that the 99ers have finally run out out of compensation?

 
At 11/18/2010 4:13 PM, Blogger Hydra said...

they got killed on their houses too.

================================

Bubble argument again. do we eally want to go back to those home prices?

Yeah, I lost 150K on one of my houses, but did I really lose that money? I never thought it was worth its peak value, and it is still just as nice as it was before, relative to other houses.

And it made some of that 150k back already, probably in more permanent value this time.

How did I get killed?
-------------------------

OK, thousands of relatively new owners in boomtowns like Phoenix got killed because the job base evaporated and they were not there long enough to build up equity.

But as a whole the market isn't that bad, people still need places to live. there is plenty of opportunity out there: I lost two long standing tenants, because they were finally able to buy a home.

I just don't see the doom and gloom. I know people who are seriously hurting, but even they don't see the doom and gloom. they just put their head down and work with what they have got.

 
At 11/18/2010 6:21 PM, Blogger morganovich said...

h-

workforce participation dropped 6 points in a couple years mirrored by a similarly sized spike in u6.

to my mind, that implies that the drop was due to increased unemployment, not a sudden preference for retirement.

"bubble" is irrelevant. the market is where it was in 1998. that's 12 years of no investment gains for the average participant, and that's before inflation. even using CPI, you've had about 40% inflation since then, so if you owned the S+P 12 years ago, you have only 60% of the buying power you had in 1998 which makes it probably 15 years + of no real gains. that's not a great lead up to retirement, especially if your house just pooched.

people who were counting on 8% equity returns are going to be badly behind plan.

 
At 11/18/2010 6:35 PM, Blogger morganovich said...

"My real question is why do we asssume that work is good, and more workers is good, and more productivity is good? For many, or even most people the goal is simply to work enough so they don't have to."

that depends on whether or not you have a job.

i love this environment. i have never made more money than in the last couple years.

i just bought a house at a ludicrous knock down price.

but if i were in the 17% of U6, i might feel differently. then times would be hard.

 
At 11/18/2010 7:18 PM, Blogger juandos said...

"i love this environment. i have never made more money than in the last couple years"...

Well morganovich maybe you should consider shopping your services around to federal employees and retirees since they have so much money now...

From CNBC: According to an IRS study last year, those employees and federal retirees owed a staggering $3.3 billion dollars in delinquent tax payments to the government...:-)

 
At 11/18/2010 7:37 PM, Blogger morganovich said...

juandos-

i don't take money from anyone with those kinds of legal connections.

it's like selling your house to a lawyer - you just never, ever do it.

 
At 11/18/2010 7:41 PM, Blogger Hydra said...

If you become unemployed when you are 63, you are probably retired.

 
At 11/18/2010 7:47 PM, Blogger Hydra said...

Ok according to Morgan ovich times are terrible, we are stuck in 1998 and he is making more money than ever.

So like I said before, I don't see the problem.

 
At 11/18/2010 7:53 PM, Blogger Hydra said...

Lots of people have income and no job.

Suppose we decided to lay off half of public workers and continue to pay 20% of their salary.

Would we be better off or worse?

What if we cut off the separation stipend after 5 years?

 
At 11/18/2010 8:00 PM, Blogger PeakTrader said...

Don't worry. Obama is on top of the situation:

White House says stimulus package exceeds jobs goal
Nov 18, 2010

"In its fifth quarterly report on the "Recovery Act" passed by Congress shortly after Obama took office, the CEA said the ($814 billion stimulus) package added 2.7 percent to third-quarter GDP growth and raised employment by 2.7 million to 3.7 million jobs...exceeded the original goal of creating or saving 3.5 million jobs by the end of 2010."

 
At 11/18/2010 8:03 PM, Blogger morganovich said...

hydra-

that's a gross oversimplification.

what i am saying is that very little net real wealth has been accumulated by households in the US over that last decade.

consumer debt tripled.

assets did not make up for it.

savings has been low.

there will always be people who beat the markets, but on average, people don't.

are you arguing that the average household balance sheet is better today that it was in 1998? that is simply not true.

we are still in a very punk economy. depending on what CPI numbers you use, this is either the worst recovery relative to downturn since ww2 (best case) or we are still in recession and mistaking inflation for growth by misstating CPI.

you have also made no case at all for your claims about unemployment and are now trying to shift the argument.

 
At 11/19/2010 12:49 AM, Blogger sethstorm said...


But, if you dodged the bullet and didn't get killed in financials or housing, and you managed to keep your job, and continued to invest as ususal, instead of retreating to gold or something, then by now you are not in such bad shape. The economy is not killing you.

On the other hand, it doesn't help that businesses are getting more of an upper hand versus the unemployed. Desperation and all that.

 
At 11/19/2010 1:34 AM, Blogger Ron H. said...

juandos,

"...followed by the Government Printing Office, where nearly seven percent were in arrears."

People in the government printing office need money? THAT'S pretty scary, isn't it?

 
At 11/19/2010 1:37 AM, Blogger Ron H. said...

"In its fifth quarterly report on the "Recovery Act" passed by Congress shortly after Obama took office, the CEA said the ($814 billion stimulus) package added 2.7 percent to third-quarter GDP growth and raised employment by 2.7 million to 3.7 million jobs...exceeded the original goal of creating or saving 3.5 million jobs by the end of 2010."

And you wonder why people don't bother to read these reports.

 
At 11/19/2010 7:17 AM, Blogger juandos said...

"On the other hand, it doesn't help that businesses are getting more of an upper hand versus the unemployed"...

Well the only hand the unemployed seem to need sethstorm is a backhanded smack to get off the couch...

 
At 11/19/2010 12:19 PM, Blogger Ron H. said...

"My real question is why do we asssume that work is good, and more workers is good, and more productivity is good? For many, or even most people the goal is simply to work enough so they don't have to."

Well, for one thing, many workers seem to think that more work is good, because they are not working but keep applying for unemployment benefits; an indication that they would prefer to be working.

And then, unless your retirement income is in the form of $100 bills under your mattress, YOU certainly want others to keep working so they can pay rent on your rental houses or buy them, and you want them to keep working at the companies you hold stock in so it will continue to have value and provide you with income, so yes, WE think work & workers & productivity are a good thing.

 
At 11/23/2010 7:53 PM, Blogger sethstorm said...


juandos said...

The jobs have to be there first, and the employer willing to hire. Otherwise it doesn't matter.

 

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