Labor market update

The weekly claims data has been exceptionally volatile of late, which strongly suggests that seasonal factors are at work, distorting the reported numbers. This is when you look at the 4-week average of the data for clarity. As the chart above shows, not much is going on beneath the surface noise—claims are about flat so far this year.

The one area of the labor market that is not receiving the attention it deserves is the number of people receiving unemployment insurance. This has been steadily declining since early 2010: in fact, 6.8 million people have stopped receiving unemployment insurance since the peak in early 2010. Just over 2.3 million so far this year have dropped off the unemployment insurance rolls. Compare that to the 4.2 million new jobs since early 2010, and the 1.3 million new jobs so far this year, and you realize that this represents a significant change on the margin, since it means that there are millions of people out there who now have a stronger incentive to look for and accept a job offer, and who are now much more interested in the health of the economy and the size of the jobs market.