Weekly claims for unemployment are important because they are very timely and can thus be early indicators of a change in the economy's dynamics. With the exception of some noisy seasonal adjustments earlier this year—when claims plunged in February only to surge in April—the trend in claims has been clearly down since the beginning of last year.
The chart above shows unadjusted claims and their 52-week moving average. Here it is easy to see how the trend in claims has been trending gradually down all year, and all indications point to that continuing.
The number of people receiving unemployment insurance also continues to trend lower, as people exhaust their eligibility and/or find a job. The total number of people "on the dole" has plunged from about 11 million early last year to about 6 million currently. This creates frustration for some, but it also increases the incentive to find and accept a job for many others.
In short, there is no sign in the claims data of any deterioration in the economy's employment fundamentals. The employment fundamentals continue to slowly improve.
Scott,
ReplyDeleteDo you agree with the BLS dropping discouraged workers off the list of unemployed workers?
If we include them in unemployment rate, then it goes well above 20%. Doesn't that show structural deterioration in employment?
Is there a reason you'd disagree with the below linked chart?
http://www.shadowstats.com/alternate_data/unemployment-charts
From my perspective, the most important job stats are not how many are unemployed, but how many are working. If the number of workers increase, and if layoffs decline, then I see the employment base of the economy as solid and expanding.
ReplyDeleteHi Elegantstroke, consider tracking on the US employment to population ratio, which has been trending sharply downwards since 2000 -- more at:
ReplyDeletehttp://wjmc.blogspot.com/2011/10/us-employment-to-population-ratio.html
I personally believe that the economy can and will achieve growth with moderate inflation in the near without improvement in the employment ratio -- the world does not have sufficient high-paying jobs for everyone -- that's not new -- the goal of capitalists has always been to provide the minimum public support necessary to avert riots and social instablity -- my guess is that the US will continue to follow that rule by maintaining some level of Social Security, Medicare, and unemployment compensation -- however, employment is not likely to improve dramatically in the coming years -- in fact, workers without certified skills will likely see their wages drop much further throughout the coming decade...
PS: I also belive that those working in the public sector will see their earnings eroded by inflation over the coming decade, especially once states like California throw in the towel and the US begins to print money to hold the union together -- the great inflation to come will rout public salaries and pensions in detail -- conversely, those with strong equities in their portfolios will win big time -- the next big class of losers will be in the public sector, which is probably for the greater good...
ReplyDeleteScott I totally agree with your comment, the number that is important is not the unemployment rate, but the labor participation rate.
ReplyDeleteNow as McKibbin correctly points out participation rate has been dropping since 1999.
My guess is that there are two factors at work here -- first women have "finished" the process of integrated the workforce, second demographic plays an important role. The final issue is that the 2002/3 recovery was, even then, considered a labor less recovery.
The American reality is depressing for many, unemployment, underemployment and fear of unemployment. Poor education (lack of skill sets) and a massive change in the American economy -- massive shift over the past two decade away from manufacturing towards services.
In 1999, America had the opportunity to do something about that problem, but politics (and America's education system) got in the way of change.
My guess is that it is probably too late now (and America is "broke" or at least no longer ready to pay to educate the nation productive assets (people). BTW I'm not advocating more money, America already had the world's second most expensive education system (per number of student).