Thursday, October 6, 2011

Unemployment claims show no sign of a recession


Initial claims for unemployment last week failed to rise as expected. At 401K, they have been lower this year in only 8 weeks—most of those in the Feb.-Apr. period, when the waters were muddied by faulty seasonal adjustment factors. On an unadjusted basis, last week's claims were the lowest of the year so far (329K). Clearly, there is no increase in unemployment claims under way, and no indication therefore that the economy is weakening, much less slipping into a recession.


As this next chart shows, the number of people receiving unemployment insurance continues to decline. I view this as a positive, since a) it reduces government spending, and b) it removes a disincentive for the unemployed to seek and accept job offers. Since the peak in early 2010, the number of people receiving unemployment benefits has declined by 5.4 million, or almost half. That's significant change, and it is continuing.

9 comments:

marcusbalbus said...

you will convince yourself until you are wrong

Bill said...

marcus: While the claims are still elevated, they appear to be headed in the right direction and roughly following the pattern for previous recoveries. I fail to see your point. Sarcasm is not an argument.

Dr William J McKibbin said...

The US employment to population ratio has been trending sharply downwards since 2000 -- more at:

http://wjmc.blogspot.com/2011/05/us-employment-to-population-ratio.html

No sarcasm, just fact...

Unknown said...

"The US employment to population ratio has been trending sharply downwards since 2000"

... After having risen during the previous 20 years. It is the unwinding of a labor bubble in which people who normally would not have entered the labor force did so in droves during the 80's and 90's. Now that they find their skills aren't needed or wanted, they're returning to their natural state which existed prior to the 80's.

Dr William J McKibbin said...

PS: The current employment to population ratio results are linked below:

http://wjmc.blogspot.com/2011/09/us-employment-to-population-ratio.html

The data I see in the chart linked above indicate every sign of recession, at least from an employment standpoint -- macroeconoomics is grounded upon employment, growth, and inflation in tandem -- society does not have the prerogative of marginalizing any of those three fundamental factors...

PPS: The global economy is deeply mired in economic calamity and mayhem these days -- said another way, prices are low and bargains are everywhere -- has anyone found any great bargains out there (?) -- I know I have...

Frozen in the North said...

While I agree that the shift in unemployment is going in the right direction, and a recession looks unlikely (at least a home grown one) it will still be very anemic growth. BTW most of the continuing claim are dropping off because of eligibility issues.

This has not been a rip-roaring recovery. The weakness of the American economy, make it susceptible to exogenous chocks.

Dr William J McKibbin said...

I personally do not see a recovery underway, which may be good news for buyers -- what I see is the buying opportunity of a lifetime -- those who are already invested are eager to see a recovery -- however, many people in America have jobs and cashflows, and for that group, I would urge delaying luxury purchases buying equities instead -- we are in a buy window that will eventually close -- yes, prices may go lower, but in the meantime, prices are low enough -- companies are buying back shares right now -- we all need to get in on that action and get our share -- real estate is particularly low -- I'm excited...

Douglas said...

Well, it is comforting, I guess, to know that we should put off all our luxury purchases and concentrate on equities. For the people out here in the real world a luxury would be knowing that you could go to Costco and buy next month's staple food items at a bargain price. But since many cannot afford to live cheaply, particularly when you have lost your job of 20+ years and haven't found another, it'll be going to the local supermarket for peanut butter and macs&cheese.

You guys need to get out more.

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