Thursday, December 10, 2009

Unemployment claims still support a recovery



Weekly unemployment claims ticked up a bit last week, but the 4-week moving average is still trending decisively down. In fact, if the recent pace of improvement continues, claims could be back to "normal" levels in 3-4 months.

7 comments:

Bill said...

Scott,

I noticed that the NSA number shot up by 200,000 claims to 600,000. Is that significant in terms of predicting a future trend?

Beatotrader said...

OK, it's fantastic try to see always "la vie en rose"...but....

from Paul Krugman
December 10, 2009, 11:07 am
The jobs deficit

It was truly amazing the way last week’s employment report was hailed by many people as a sign that our troubles are over. Here we are, having suffered huge job losses, and needing to make up the lost ground — and a report showing that we’re still losing jobs, but not as fast, is grounds for celebration?

Anyway, I thought it might be useful to create a sort of benchmark for the level of job growth that would really count as good news. I start from the fact that we’ve lost about 8 million jobs since the recession began — that’s the official number plus the preliminary estimate of the coming benchmark revision. I then take EPI’s estimate that we need to add 127,000 jobs a month. EPI points out that when you put these numbers together, they say that to return to pre-crisis unemployment within two years we’d have to add 580,000 jobs a month. That’s not going to happen.

But let’s set a more modest goal: return to more or less full employment in 5 years –which means seven lean years of depressed employment. To keep up with population growth over those 7 years, the United States would have had to add 84 times 127,000 or 10.668 million jobs. (If that sounds high, bear in mind that we added more than 20 million jobs over the 8 Clinton years). Add in the need to make up lost ground, and we’re at around 18 million jobs over the next five years — or 300,000 a month.

So that’s a useful benchmark. Even if we add 300,000 jobs a month, we’re looking at a prolonged period of suffering — a huge cost from the Great Recession. So that’s kind of a minimal definition of success. Anything less than that, and it’s bad news. It sort of puts that wonderful report that we only lost 11,000 jobs in perspective, doesn’t it?

alstry said...

Scott,

It is amazing how much deterioration we have had under Obama's misguided policies.

Unemployment in Architecture right now is at 66%.....I couldn't believe it when my buddy told me.

New home construction is down 80% from peak....can you imagine how many unemployed construction workers are out there?


New Car Sales, discounting the ridiculous create more debt for clunkers, are running about 50% down.

We are likely going to lose over 300K jobs from shutting down over 5000 auto dealers over the next year.

40 out of 50 states will have exhausted the unemployment funds by the end of the year as Obama spends and spends and spends.

Muncie Indiana now has to shut off its street lights because it can't afford the electrical costs.

Banks are refusing to foreclose on tens of thousands of homes because the value is less than the foreclsoure cost.

The fiscal crisis facing our states are unprecedented and the consequent layoffs will likely reach in the millions over the next 12 months.....

Can you imagine what unemployment will look like in just another year?

Do you really think we can take 3 more years of this guy?????

Scott Grannis said...

Bill: I have no reason to think the seasonal adjustments are faulty, so no, I don't think this info tells us anything.

Scott Grannis said...

Re Krugman: He's not telling us anything we don't already know. We had a deep recession, so the recovery will need to be huge to just get the economy back on its trend growth track. Most people expect the recovery will be less than huge, and the main reason is all the government intervention and wasteful spending and higher tax burdens that are awaiting us. In the meantime, though, the economy is climbing up the recovery ladder rather rapidly. First you have to stop firing people, then you start hiring. We haven't yet finished the firing period, but we're getting close.

brodero said...

NSA jobless claims were supposed to shoot up this week. That is why they used a 1.402 adjustment factor.....next weeks factor is 1.157.

Игры рынка said...

"In fact, if the recent pace of improvement continues," continuing claims will equal people on Emergency Unemployment Compensation program in 1 or 2 months (currently at 4179k and accelerating).

Do not look at unemployment rate. It is relevant only for FED excel models!