Jobless Claims Would Have to Approach 1M to Reach 1982 Level

I've posted about this before, the fact that the reported weekly jobless claims numbers are not adjusted for the size of the labor force. For the month of February, weekly initial unemployment claims averaged 627,875. As a percent of the civilian labor force, those jobless claims represent 0.4071% of the 154.214 million labor force.

The chart above shows the "initial jobless claims as a percent of the labor force" back to January 1980. To reach the same level as the peak in 1982 of 0.6067%, today's jobless claims would have to be almost 936,000, or almost 50% higher than the current 628,000.

So how about we first get hysterical for awhile about the "worst economy since 1982" before we go totally hyperbolic about the "worst economy since the Great Depression." Once we reach the 936,000 jobless claims it would take to equal the economic conditions of 1982, then let's start talking about Great Depression II, but not before.

Related: On Saturday I was at the Great Lakes Crossing Mall in Auburn Hills (suburb of Detroit), and it seemed just like Christmas: the parking lot was full of cars, the stores were full of shoppers, the food court was full, people were lined up to buy movie tickets, etc. And this shopping activity was taking place in the state with the highest unemployment rate in the country (11.6%)!

Bottom Line: The long checkout lines at a busy mall in Michigan on a Saturday afternoon during "Great Depression II" are a far cry from the long breadlines of "Great Depression I" in the 1930s.

Comments

[bs_o_meter]

Suggest you take a look at the percent drop in employment comparing today with 1982. The percent drop is now greater. it only shows you how the unemployment numbers are distorted.

2009 Mar 16 04:29 AM

[jamesa40]

Good article. In fact, I was at the Verizon store yesterday and I couldn't believe how packed the place was. People were snapping up the latest $300 phones like they were candy. Then, I went out to eat and there was an hour wait. While this observation is not indicative of the entire economy, it does make one wonder if perhaps Great Depression II is a little over-hyped?

2009 Mar 16 08:24 AM

[kruser53]

Mark - - -

This is a good point but fails to determine whether any changes have been made in how statistics are kept since 1982. Have you looked into that question?

Also, as bs-o-meter pointed out, the initial unemployment claims have doubled by your metric, whereas in 1982 it rose from a higher base by only 50%. To provide full analysis this should be discussed. The percentage changes could have an influence on how the public psyche is affected.

Finally, how do debt levels today compare to 1982? This is a factor that would have a strong effect on the economic impact of rising unemployment.

It is disappointing that an educator would simply publish snippets of information without at least a suggestion of factors that should be considered in analysis and interpretation. You don't need to spell out all the details of analysis, but you should at least mention what might be important. What assumptions do you make about your readers? Are they all so smart that they don't need any analytical suggestions? Or are they so stupid that such suggestion would be wasted?

Please provide a little critical discussion of your topics.

2009 Mar 16 10:04 AM

[Jack Walker]

Mark,

Your adjustment to the unemployment numbers makes good sense. Keep up the good work. We need more balance to the overwhelming negative bias we receive from financial media.

Jack

2009 Mar 16 12:55 PM

[Fred Voetsch]

Perhaps but there are two things that shoulld be considered:

1. The rate of change. So far we have seen as great a rate of change and we are still in this recession.

2. Changes to how the unemployment rate is calculated since 1980.

I am not sure #2 is as big a deal as many make it out to be but the bottom line is that our current unemployment situation is getting worse while 1980's is not.

2009 Mar 16 04:29 PM

[Fred Voetsch]

On Mar 16 12:55 PM Jack Walker wrote:

> Mark,
>
> Your adjustment to the unemployment numbers makes good sense. Keep
> up the good work. We need more balance to the overwhelming negative
> bias we receive from financial media.
>
> Jack


Hi Jack. Would that "overwhelming negative bias" include the constant misuse of operating earnings when reported earnings are the only legitimate way to determine and report earnings and thus, P/E ratios?

Read this from Standard & Poors:
www2.standardandpoors....

Then look here:
www2.standardandpoors....

Why is the media regularly reporting P/E ratios of 10 when in FACT the current P/E, using Q4 reported earnings is 50?

2009 Mar 16 04:33 PM