Thursday, April 5, 2012

Continued good news from the labor market

Weekly claims for unemployment continue to decline. Compared to this time last year, claims are down 12%, and so far this year, claims are down at a 25% annualized pace. At this rate claims will be down to historic lows a year from now—it doesn't get much better than this. The message from claims is that layoffs now are just about as low as they can get, which means that businesses have already made almost all of the adjustments that were needed to cope with the Great Recession and the realities of our very sluggish recovery.

That's the same message that we get from the Challenger, Gray & Christmas tally of publically-announced corporate layoffs. Business is now lean and mean, so further expansion of the economy will almost surely translate into more hiring. All very good news.


Benjamin Cole said...

Good news, but could be better. I wish the Fed would get bullish. The feeble dithering, the lack of direction, the peek-a-boo and hide-and-seek Fed is the classic picture of regime uncertainty.

I sure hope the Fed does not again decide to fight global commodities inflation with tight money.

brodero said...

The 52 week moving average of non
seasonally adjusted jobless claims
dropped another 739 to 394,349. The
pattern is virtually identical to early
1993 and 2004.The postponable purchases to GDP ratio at that time was 19.1% for 1993 and 22.2% in 2004.
This ratio today is 17.7%. There is more room to run.

Squire said...

Ok. Not having bad new is good news. #350k unemployment claims per week is normal. We are back to normal. Go below #300k and you have another bubble followed by a recession. The unemployment level makes sense considering all the structural impediments in the U.S. economy. Generally speaking I mean crony government central planning and the ideology of become a European country which means higher normal unemployment.

Squire said...

We are now at the natural unemployment level in the U.S. But the Federal Reserve is mandated to have unemployment lower than this because of the failure to accept we are at a normal level now.

The Fed must by law try to stimulate the economy to get unemployment below its natural level. That is, it must start working on its next bubble. Nobody wants to do reforms. That is too painful and special interests will override the limited and weak voices in favor of reforms.

I enjoy speculating where the next bubble will show up. And when.

Jim said...

I fail to see how this is good news. There is no one else to fire or layoff. Unemployment is astronomical if you take account of the people who have given up. This is more dangerous than we think.

Anonymous said...

"The pattern is virtually identical to early 1993 and 2004."

With today's disappointing NFP number, I'm wondering if brodero is on to more than he realizes. In 1993, Jan and Feb added 310K and 242K jobs respectively, only to have March see a loss of 51K jobs. Did they have a warm winter in 1993? April that year sprung back with 308K jobs. Even the setup in the 2nd half of 1992 looks eerily similar to the 2nd half of 2011.