Thursday, March 29, 2012

Jobless Claims Close to a Four-Year Low

Initial jobless claims (seasonally adjusted) fell to 359,000 for the week ending March 24, which was the lowest number since April 2008, almost four years ago, according to today's Labor Department report.   The four-week moving average of weekly claims, which smooths out some of the weekly volatility, fell to 365,000 - the lowest level since May 2008.  At the current rate of decline, weekly jobless claims should be back to pre-recession levels below 350,000 by this summer, possibly by June.  

17 Comments:

At 3/29/2012 2:20 PM, Blogger Jon Murphy said...

On a related note, private sector employment is at the highest level in over two years. It's still about 5% below the pre-recession peak, but is steadily growing.

 
At 3/29/2012 2:36 PM, Blogger Ironman said...

So far, all is going as we have foreseen....

But isn't this week's initial claim of 359,000, which is supposed to be the lowest number since April 2008, somewhat higher than last week's initial jobless claims figure of 348,000, which was also the lowest number since April 2008?...

 
At 3/29/2012 2:40 PM, Blogger Mark J. Perry said...

This was the week that the DOL implemented its annual revisions for seasonal adjustments, so last week's claims were revised up to 364,000, and all data back to 2007 were revised.

 
At 3/29/2012 2:42 PM, Blogger morganovich said...

jon-

i'm not so sure that isn't just population growth.

the private labor force is currently at levels first reached in 2000.

the US population has grown almost 11% since then.

it's grown about 3% since 2008, which is also about the trough to present increase in private workforce.

thus, we remain mired at a workforce participation rate that's been at 30 year lows.

the employment situation may have stopped getting worse, but it does not look to me to be getting any better either.

even the really deep US recession (like 1958) had full employment recoveries in under a year.

these last 2 have been the slowest jobs recoveries since modern records have been kept.

they are also the 2 that had the most monetary intervention from the fed.

one might be tempted to look for some causality there. mistaking the brake for the gas really mucks up a drive...

 
At 3/29/2012 3:54 PM, Blogger AIG said...

the private labor force is currently at levels first reached in 2000. the US population has grown almost 11% since then. it's grown about 3% since 2008, which is also about the trough to present increase in private workforce.

Yes but population growth isn't a very good proxy for the workforce in the short term. A lot more people likely exited the workforce due to retirements during this time, then entered. Population growth, after all, is driven by children, and they won't enter the fork force for a couple of decades.

these last 2 have been the slowest jobs recoveries since modern records have been kept.
they are also the 2 that had the most monetary intervention from the fed. one might be tempted to look for some causality there.


While one can certainly make various arguments in favor of such a hypothesis, one can also make the argument that this recession is different from others in the recent past because of a labor market mismatch that we have never seen in the recent past (since the industrial revolution started). Looking at who was most affected by the crises, one can make the argument that a lot of those people are simply never going to recover.

We will likely end up with a permanently unemployed class of people, like they have in England, simply because those people have no skills which the market needs, and their marginal value is simply too low to pass over the radar. That's a pill we may have to swallow.

 
At 3/29/2012 4:35 PM, Blogger juandos said...

Just imagine if one took the letter 'L' out of BLS one would get an idea of what was really happening...

Which Is The True Jobless Rate Correlation? Charting The Schrödinger Unemployment Rate

'The problem however, is that as always happens in this case, initial claims reflect only a discrete component of the true unemployment situation in the New Normal, which more than anything is characterized by one specific feature: the avalanche like implosion of the labor force, and the departure of millions of people, almost monthly from the labor pool...'...

Only 54% Of Young Adults In America Have A Job

'when it comes to young adults (18-24) in the US, the employment rate is just barely above half, or 54%, which just happens to be the lowest in 64 years, and 7% worse than when Obama took office promising a whole lot of change 3 years ago'...

Well that's definitely one promise kept...

 
At 3/29/2012 6:23 PM, Blogger AIG said...

'when it comes to young adults (18-24) in the US, the employment rate is just barely above half, or 54%,

But that is a rather pointless number that can be interpreted many ways.

 
At 3/29/2012 6:53 PM, Blogger morganovich said...

aig-

"Yes but population growth isn't a very good proxy for the workforce in the short term. A lot more people likely exited the workforce due to retirements during this time, then entered. Population growth, after all, is driven by children, and they won't enter the fork force for a couple of decades."

untrue. you are making a whole raft of unsupported assumptions. us population grows for lots of reasons, including immigration. further, it has been growing steadily for 100's of years. those born in the 90's are entering the work force. sure, a child born in 2009 is not a worker, but there is a whole cohort of new ones. demographics have not changed that much. population grew at a higher rate from 1990-2000 than 2000-2010.

the median age in the US is 36.8 years. that's prime working age.

67% are 15-65 and people are working longer.

"We will likely end up with a permanently unemployed class of people, like they have in England, simply because those people have no skills which the market needs, and their marginal value is simply too low to pass over the radar. That's a pill we may have to swallow."

it's unlikely that that suddenly sprung onto the scene in 2001 particularly given that unemployment in 2000 was incredibly low and it was brutally hard to hire at all. why would that happen out of the blue? it's not like the 90's were not a knowledge economy.

the more plausible hypothesis seems that we never really recovered from 2001 and have just been mistaking inflation for growth and printing money and running up debt for a real economy.

 
At 3/29/2012 6:54 PM, Blogger morganovich said...

"when it comes to young adults (18-24) in the US, the employment rate is just barely above half, or 54%,

But that is a rather pointless number that can be interpreted many ways."

here, i agree with AIG. that is more an indication of higher college enrollment than anything else.

 
At 3/29/2012 8:10 PM, Blogger AIG said...

Morganovich, I may agree with you on your second point about never recovering from the 2001 recession. A bubble was created after it. But, I still think this is a labor market mismatch that is unlikely to recover itself until those affected "retire". In the 2000s you have a lot more global competitiveness and a lot greater "knowledge economy". The ability of companies to gain labor efficiencies so quickly during this crises indicates that there was a lot of "dead weight" before. There is a fundamental shift from the 90s. The 90s ushered the "knowledge economy" in, but today we see the results.

Either way, I'm not saying we're going to be stuck with 9-8% unemployment, but we're unlikely to get down to the 5s until there is a refreshing of the labor force (which won't take that long, maybe a decade)

As for the first part, I was only making the point that population growth doesn't tell us everything about the labor force. Not necessarily.

 
At 3/30/2012 2:08 AM, Blogger juandos said...

aig says: "But that is a rather pointless number that can be interpreted many ways"...

No it NOT a pointless number by any stretch of the imagination...

Its indicative of many conditions that drive that number...

I'll give you two of them:

1) government over reach - the minimum wage mandate...

2) consumer spending is down and has been for a number of years in a sectors of the economy...

 
At 3/30/2012 2:10 AM, Blogger juandos said...

morganovich says: "here, i agree with AIG. that is more an indication of higher college enrollment than anything else"...

ROFLMAO!

Kids going to college don't work part time anymore?!?!

Look at my response to aig for this...

 
At 3/30/2012 8:37 AM, Blogger morganovich said...

aig-

if your hypothesis is correct, we should have seen such pressures building in the late 90's, and instead we saw the opposite. further, if you are correct, we'd expect to see unemployment concentrated in older workers, somehting that is not happening.

jobs are tight all over. you would not want to be hunting for a knowledge based wall st job just now.

sure, some of this is based on whole classes of jobs getting squeezed out, but i think you are misinterpreting what i said.

my point is that current jobs growth is not really growth, it's just the population expanding. jobs growth is barely keeping pace.

to be sure, we've seen a big spike in the long term unemployed, but this may have a great deal more to do with big extensions to unemployment insurance than anything else. my friend just tried to hire an assistant and had her say no because she could get almost as much on unemployment and got big benefits as well. she was going to run that out before getting serious about looking for work. she turned down something like $60k a year.

juandos-

i think you are imagining a world that, if it ever existed, has been gone for decades. most kids in college to not work and have not for ages.

got any data to back up your notions?

 
At 3/30/2012 8:38 AM, Blogger morganovich said...

j-

also: a huge jump in grad school enrollment also drives that stat higher. faced with a crummy economy and poor jobs prospects, loads of kids go back to school.

 
At 3/30/2012 12:28 PM, Blogger juandos said...

"i think you are imagining a world that, if it ever existed, has been gone for decades. most kids in college to not work and have not for ages"...

Ahhh, life on planet morganovich must be pleasent...

Meahwhile back on planet earth, specifically in the United States there are real college kids all over the place working part time at all sorts of places...

Sadly there isn't as many of them working as there was 10 years ago...

"got any data to back up your notions?"...

Do you believe government data?

College Student Employment

 
At 3/30/2012 4:20 PM, Blogger AIG said...

Kids going to college don't work part time anymore?!?!

A lot less do, for several reasons like:

a) more students go to grad school where they don't have time to work part time
b) as their parents have gotten richer over time, less kids don't have to work part time through college

The point me and Morganovic were making, is that the reasons for those numbers can be varied. You interpret them one way, I interpret them another.

if your hypothesis is correct, we should have seen such pressures building in the late 90's, and instead we saw the opposite.

I think the technological change has accelerated considerably in the past few years, compared to the 90s. In the 90s one could easily get away with having no computer skills at all. Today, it is virtually impossible.

we'd expect to see unemployment concentrated in older workers, somehting that is not happening.

Not necessarily older, just lower skilled. And we certainly see much higher unemployment in people with lower levels of education, and people in particular industries.

you would not want to be hunting for a knowledge based wall st job just now.

"wall st" jobs are a tiny fraction of the overall market, even if we focus only on "knowledge jobs". And of course, they were overinflated to service a bubble, which isn't coming back.

my point is that current jobs growth is not really growth, it's just the population expanding. jobs growth is barely keeping pace.

But how does population growth (ie more people entering the labor force), "create" job growth? We would see lower participation rates, but why would we see "jobs growth"?

I personally think we don't see high jobs growth because companies have become a lot more efficient, and no longer need to the 'dead weight" they had before. They are not likely to put on the weight in the future.

 
At 3/30/2012 4:25 PM, Blogger AIG said...

Do you believe government data?

Yes but looking at that data, the % of "full time students" working for any number of hours peaked around 1998, and has been going down since then. Also, it seems it peaked at a little over 50%. So this shows that "full-time students", for the most part, never worked and don't work.

Part-time students of course work a lot more, but even their numbers are either flat, or they have been falling slightly since the mid-80s.

But there's many explanations for these numbers.

 

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