In response to the all-too-frequent lament that jobless claims haven't fallen decisively below 400K per week for a long time, I offer this chart, which compares the level of claims to the size of the workforce. Claims may not have fallen dramatically this year, but the workforce has been steadily increasing (payrolls are up 1.25 million year to date), with the result that the ratio of claims to the workforce (which I term "workforce disruption") has fallen by 6% since Dec. '10. The chart also shows that the ratio hasn't often been as low as it is today. The economy could be doing a lot better, but things could also be a lot worse.
In fact, one could argue it takes a bubble in the US economy to get claims below 400k.
ReplyDeleteThe US labor market is huge and dynamic. As your chart clearly shows 400k initial claims a week is quite consistent with increasing employment.
How does the labor participation rate fit into this equation?
ReplyDeleteHigh unemployment keeps labor costs down and profits up. What could be better than that?
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