Both of these charts show seasonally adjusted first time claims for unemployment. The top chart takes the long view using a 4-week moving average, while the bottom chart zooms in on the weekly numbers for the last 5 years. Claims are now down 37% from their early 2009 high, and it would only take a 20% decline from here to get claims down to the levels that prevailed in 2006-2007. Dare it be said that we are beginning to see signs of actual strength in these numbers? Perhaps, but for now the main thing driving adjusted claims lower is that actual claims are not declining as they usually do at this time of the year. But no matter how you spin the numbers, I think it's safe to say there has been some genuine improvement in the economy in recent months, and that is one more reason to think that Q4 GDP growth could come in much stronger than Q3.
I would respectfully quibble that these numbers show a "genuine improvement" in the economy and argue that they sort of distract from the real labor market issues.
ReplyDeletePersonally, I would look for 2 things before I said the labor market's health was signaling improvement:
#1 A significant decline in the "underemployment" rate. Right now it's at 17%, near its highs and trending flat/up.
#2 A significant improvement in real wages/salaries. These measures are currently pretty flat.
Without these, I think you have a suspect and vulnerable economy driven by upper earners, asset price bubbles/wealth effect, lower savings rates, etc. I (personally) don't think that is a healthy situation and would trade off some growth for improvement in those measures.
Would you not agree that "genuine improvement" must first start with a significant decline in layoffs? First you stop firing, then you start hiring. We are headed in the right direction.
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