Thursday, April 14, 2011

Weekly claims point to continued, but slow progress

First time claims for unemployment last week unexpectedly jumped, but this is entirely within the range of normal volatility for this statistic. On a four-week average basis, which is the preferred measure since it helps deal with the frequently-occuring problem of random blips, there is no sign of any meaningful change in what still appears to be a declining trend.

In this next chart, which uses unadjusted data from two weeks ago, we see an encouraging trend toward fewer people receiving unemployment insurance. Still, Congress' repeated extensions of benefits have likely had the unintended effect of prolonging this recovery, since on the margin a longer benefit period reduces the incentives of the unemployed to find and accept new employment.

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