Thursday, January 8, 2009

Unemployment claims drop 20%

First-time claims for unemployment have fallen by 20% in the past two weeks, contrary to widespread expectations that they would continue rising. Meanwhile, continuing claims for unemployment are at a new all-time high—so one explanation for the disparity would be that while companies may not be firing people at the same pace as before, those who have lost jobs can't find new ones, so things are still awful.

Or so they say. This data may prove to be an anomaly, a mystery, or a sign that this recession is winding down—it's too early to say for sure. A glance at past recession experience suggests that big declines in claims typically do signal the end of a recession. And with the onset of recession catching most people by surprise, that's what usually happens when recessions end. For the time being I'm going to file this with the other indicators out there that are saying that the economy is slowly recovering.


Gene Prescott said...

I read several large states (North Carolina being one) total systems shut down last week from volume overload .... so maybe those claims showed up as zero?

Scott Grannis said...

Curious that the Labor Dept. did not make any mention of that. They usually try to highlight unusual circumstances that might be impacting the data.

Paul said...

I mentioned this to the manager of our branch(I work for a large corporation.) He said this might be due to the fact that alot of companies try to avoid layoffs during the holidays. I know that's our policy, anyway. So the next few weeks should tell us for sure.

Scott Grannis said...

You get an A for effort, but that's not necessarily a good explanation. To the extent that many companies try to minimize layoffs during holiday periods, this should be reflected in the seasonal adjustments that are made to the numbers before they are released.

Chad said...

Sorry I'm a little late on this topic, but I just came across it - and this blog - today.

Here's something I'd be interested in finding out...maybe you already know, Scott. With the job losses being announced, how many full-time employees are being let go vs. part timers vs. contractors vs. open positions being pulled off the table? And how are they factored in the job loss figures? Are they all equally weighted?

The reason I'm asking is because I was watching a news story here in the Twin Cities a couple of nights ago about a major hospital in downtown Minneapolis that just announced 100 "job cuts." Towards the end of the story, it was mentioned that some of those cuts - sorry, I don't remember the exact number - weren't layoffs, but open positions that were going to go unfilled.

This begs the question: if a job is never filled, did the job ever exist? And since no one can be cut from a job that never existed, can it really be considered a "job cut" when the position is closed?

As an aside, I had dinner with my dad tonight. We don't get together too often, just the two of us, so we went to a very nice - and very expensive - steak/seafood place to relax and get caught up.

It was tough to get a reservation - the place was PACKED! And when I drove by the place Thursday night at 8:30 - not a Friday night, not a Saturday night, but a THURSDAY night - it looked full then, too!

So to all you doom-and-gloomers out there, don't tell me we're living in the Great Depression Part Deux when things aren't even as bad as 1990-91, 1981-82, or're insulting those souls who actually had to suffer through the first - and hopefully only - depression. Until we're all jumping out of windows or selling pencils and apples on the street, I don't want to hear it.

Keep up the good work, Scott! You're efforts are much appreciated!

Scott Grannis said...

Chad: Thanks! I don't know the answer to your question. But I do agree with you that the press has made this recession sound much worse than it really is. I've been in the camp that says this is a crisis of confidence, not a credit crunch, and as such, we can get out of it quickly. There is no shortage of money. I've seen restaurants packed as well, even on Monday nights. This is not yet even close to what earlier recessions like you mention were like.