Thursday, March 17, 2011

Adjusted Jobless Claims Update: Good News


It's been awhile since I featured this pair of charts above showing: a) the number of jobless claims vs. the size of the U.S. labor force (top chart), and b) jobless claims as a share of the labor force (bottom chart), both updated through February (BLS data here and here). 

The top chart shows why unadjusted jobless claims are meaningless: the size of the U.S. labor force has almost doubled over the last 42 years, from 77.57 million in 1968 to the current level of more than 153 million. The bottom chart shows jobless claims adjusted for the size of the U.S. labor force. Jobless claims averaged 406,250 in February, which is 0.2651% of the February labor force of 153,246,000, and is a 2-1/2 year low (lowest since July 2008). Jobless claims as a percent of the labor force have declined the last 6 months in a row, and in 10 out of the last 12 months. Since the peak of 0.415% in March of 2009, adjusted claims have fallen consistently to the current level of 0.265%,

This measure of initial jobless claims, adjusted for the increasing size of the U.S. labor force over time, 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, and about the same as the 1969-1970 recession. The sharp reduction in adjusted jobless claims from the March 2009 high of 0.415% follows the same pattern of sharp reductions at the end of each of the last six recessions.

Bottom Line: Adjusted jobless claims in recent months are at about the exact same levels as during the last two post-recession expansions in 1992-1993 and 2002-2003 (see red line in the bottom graph), and suggest that conditions in the labor market are actually better than the unadjusted number would suggest.  See Scott Grannis' post today for a similar analysis. 

6 Comments:

At 3/17/2011 2:47 PM, Blogger Sean said...

I thought the signature problem of the present day wasn't "too many layoffs" but "not enough job creation". So while the comparison of layoffs makes this recession seem mediocre, the slow job creation rate describe a more acute long-term jobless problem.

 
At 3/17/2011 3:24 PM, Blogger morganovich said...

however, the size of the labor force is flat at best and quite possibly in a downtrend.

how do you get an employment recovery when the labor force does not increase?

 
At 3/17/2011 4:01 PM, Blogger Junkyard_hawg1985 said...

I actually like the top graph. It is the first time I recall seeing the data plotted this way. It also tells a story: layoffs are dropping, but the labor market is contracting. The extended contraction (>3 years) in the labor market certainly appears to be a new phenomenon.

 
At 3/17/2011 4:27 PM, Blogger morganovich said...

JH-

also worth looking at is the employment to population ratio (which is sitting at 25 year lows and has broken the major post war trend)

http://cr4re.com/charts/charts.html#category=Employment&chart=EmployPopFeb2011.jpg

watching the BLS shave 50 bp off of u3 by shrinking the workforce (and even population) worries me.

i think it occludes more than it reveals.

to talk about an improvement in unemployment when jobs are not being created seems very misleading.

 
At 3/17/2011 4:49 PM, Blogger Dr. T said...

Comparing the number of people employed with the number of new unemployment claims has little utility. We need to know how many are currently unemployed (real numbers, not the "official" numbers that only count those receiving unemployment payouts).

Here are the most recent numbers from www.usdebtclock.org:

Employed: 138,267,252
Unemployed: 24,218,449 (14.9%)
Unemployed (official): 13,560,921 (8.9%)

True unemployment is nearly 15%, indicating that we have had little employment recovery since the official end of the recent recession. The claim that layoffs are decreasing is misleading because many surviving businesses have pared workforces down to the bone and millions of workers who lost jobs early in the recession have not gotten new jobs. There just aren't many more jobs that can be eliminated. That's why the new unemployment claims numbers have declined. This trend does not indicate an improved economy.

 
At 3/18/2011 2:30 PM, Blogger juandos said...

"adjusted jobless claims" is a euphamism for trying to make a problem poltico not look like such a loser...

March 17, 2011

Gallup Finds U.S. Unemployment at 10.2% in Mid-March

'Underemployment was also unchanged from the end of February, at 19.9%'

 

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