We Never Got Close to 900,000 Jobless Claims
Jobless claims as a share of the labor force have fallen in each of the last seven months from the 0.422% peak in March, and dropped to 0.345% in October, the lowest level since last November (see chart above). In contrast, jobless claims as a share of the labor force peaked at 0.60% in the three recessions above in the 1970s and 1980s. Given the current size of our labor force (about 154 million), we would have to have had more than 900,000 jobless claims during the most recent recession to reach the level of 0.60%, which is much higher than the peak jobless claims level in April of 658,750.
Jobless claims as a share of the labor force have fallen in each of the last seven months from the 0.422% peak in March, and dropped to 0.345% in October, the lowest level since last November (see chart above). In contrast, jobless claims as a share of the labor force peaked at 0.60% in the three recessions above in the 1970s and 1980s. Given the current size of our labor force (about 154 million), we would have to have had more than 900,000 jobless claims during the most recent recession to reach the level of 0.60%, which is much higher than the peak jobless claims level in April of 658,750.
10 Comments:
Well Professor Mark you're not alone in showing that there might be an upside in today's job market...
Vincent Fernando's article: Jobless Claims Fall In California, Florida, and New York
the tricky part in this analysis is that far more people work for themselves that did in the 80's.
people like that do not show up in jobless claims.
that makes it very likely that current numbers would be higher if we still had an 80's employment pattern.
You make an excellent point. "As closely as jobless claims are followed as a barometer of the labor market, there’s one major problem with the way they are interpreted, especially when they are used to compare current conditions to past recessions: there’s no adjustment for the size of the labor force." You'd think the BLS could add this simple calculation into the mix given how much larger the BLS staff is today vs. 1970. Hard to imaging a bigger government that produces less statistics in this computer age.
Question -- what happens to your analysis when you calculate the real unemployment number -- 18% ?
Government numbers in real time are always prejudiced. If they were to put out the real numbers, their agenda and their political careers would be over.
Yet another University of Michigan Consumer Sentiment Survey takes a nosedive and a certain University of Michigan professor fails again to acknowledge it...
except, of course, when it's rising.
Oh and the trade deficit widened in September meaning that Net Exports and hence GDP growth will decline somewhat.
The seasonally adjusted purchase index for home mortgages fell 11.7% in the first week of November and the four week average is down 4.5%.
On the horizon: look for more falling house prices.
But you are going to lose 6% of nonfarm payroll, aren't you? What an ugly looking chart. And that's what NBER looks at in determining the trough of recessions.
Mark,
You mixed statistics with this chart. You took the weekly statistics and adjusted them to total workforce for both sets of data. Unfortunately, the weekly unemployment numbers only account for a subset of the workforce. The % of the workforce covered by Unemployment Insurance has shifted considerably since 1975. In 2008, only 36% of the unemployed was covered by unemployment insurance. From the BLS:
"Because of these and other limitations, statistics on insured unemployment cannot be used as a count of total unemployment in the United States. Indeed, during 2008, only 36 percent of the total unemployed received UI benefits. The weekly data on UI claims do have important uses, however, and provide a timely indicator on labor market conditions."
This data is also evident when comparing the "insured unemployment rate" from the weekly statistics to the unemployment rate as calculated the the BLS from the monthly survey. Here are some reference points:
The week of May 31, 1975, the weekly unemployment rate based on UI was 7.0%. The May 1975 unemployment rate from the BLS was 8.3%. An offset of 1.3% (or 18.5% increase in the unemployment rate between the two sets of statistics). In May 2009, the insured unemployment rate based on weekly statistics was 5.1% compared to an unemployment rate of 9.1% according to the BLS. This is an increase of 4% (or 78.4% increase in the unemployment rate between the two sets of statistics). The change in the two sets of data are the result of the percentage of the population covered by unemployment insurance.
" what happens to your analysis when you calculate the real unemployment number -- 18% ?"...
Hmmm, where did you get that number from?
This BLS site?
Juandos has provided a nice link to the BLS site for total current unemployment. Total unemployment includes millions of people who are grouped as marginally attached persons. Three quarters of these people are not looking for a job because of family responsibilities, schooling, ill health or no transportation.
The other one quarter of marginally attached persons are discouraged workers. They are not looking for work because they beleive jobs don't exist for them at this time. The reasons they don't look for work is that they think they lack schooling, experience or skills; or discriminiation works against them.
During the prosperous times of past economic cycles the marginally attached rates of unemployment has been much lower. The prospect of higher wages with plentiful jobs gets people of the job sidelines. Is the U.S. economy too hollowed out now, with the loss of millions of manufacturing jobs to foreign economies, to ever lower the marginally attached unemployment rate?
Junkyard Hawg1985
That was EXCELLENT!!!!!!
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