Unemployment Data: Exhaustion Rate Will Soon Lead To False Green Shoot Chatter 43 comments
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I have a feeling that in the not too distant future the continuing jobless claims numbers are going to start "improving" due to a negative effect - let me explain. Unemployment benefits are limited: the standard is for up to 26 weeks of insurance benefits. There are currently Federal programs offering an extension of 13-20 additional weeks.
The markets like to focus on the jobs report, which releases two main numbers:
- The number of first time jobless claims - this is a measure of new unemployment - how many people are filing for unemployment for the first time in the week in question.
- The number of continuing jobless claims - this is the total number of people collecting unemployment.
Well, it seems obvious to me that as we extend our fiscal problems, many people will exhaust their unemployment benefits - they will drop out of the continuing claims number NOT because they have found a job and are going back to work, but because things are so bad that they have used up their benefits and will no longer be counted in the statistics. Of course, this makes the continuing claims number smaller, and leads to chatter of "green shoots" in the job force.
The United States Department of Labor publishes statistics on the "exhaustion rate" - this is a measure of the number of people who have used up their benefits, and will no longer be receiving unemployment checks. I took it upon myself to run some numbers based on their data, and produced the chart below (click to enlarge):
I'm not sure if "parabolic" is a strong enough word to describe the current upswing (a record!) in the exhaustion rate. Again - this is why economists who refer to what "typically happens in a recession" are spouting nonsense - this is clearly not a typical recession.
It turns out the Department of Labor allows you to easily generate charts on their own website too. Unfortunately, they make it so that you cannot grab the pictures, so I had to regenerate one more telling chart (click to enlarge):
As you can see, the percentage of people who have been collecting unemployment benefits for a longer amount of time is also at a record.
Don't be fooled if and when continuing claims numbers begin to ebb - it's likely a numerical manifestation of exhaustion of unemployment benefits - but don't expect the media pundits to mention this part of it!
Disclosure: None
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U-6 Total unemployed, plus all marginally attached - 16.4%
On Jun 05 12:54 PM Kid Dynamite wrote:
> thanks for all the comments - I wrote this YESTERDAY - it has nothing
> to do with today's report.
>
> the point of my post is simple: more people are receiving unemployement
> benefits for LONGER, and more people are exhausting their unemployment
> benefits.
>
> I am under the impression that these exhaustions will fall OUT of
> the "continuing claims" number (which is NOT what was reported today)
> - which will eventually result in the illusion of improvement, because
> people are no longer elligible for claims.
>
> people who have exhausted their benefits are DEFINITELY STILL reported
> in the "unemployment rate" which was released today, as FightingYoda
> stated.
The simple fact is economic analysts who don't get to the crux of the argument and spin trend in a single employment measurement are not worth their job title. Shame on them and the brokerages that employ them. Of course the government doesn't make figuring out this number easy for the simple fact that it always looks a lot worse than they would care for you to see.
On Jun 05 01:01 PM Moon Kil Woong wrote:
> It would be more helpful if someone published the agregate decrease
> or increase in total wages. Decreases in hours worked, decreases
> in the labor pool whether they ar disgruntled, discourages, seeking
> enploment, etc. makes no difference economically. What matters is
> the agregate amount of money circulating in total wages.
>
> The simple fact is economic analysts who don't get to the crux of
> the argument and spin trend in a single employment measurement are
> not worth their job title. Shame on them and the brokerages that
> employ them. Of course the government doesn't make figuring out this
> number easy for the simple fact that it always looks a lot worse
> than they would care for you to see.
On Jun 05 10:32 AM market mojo wrote:
> MWSnap is a free softare that you can use to take a "snapthot" of
> anything on your screen including images on websites.
>
> You might be able to use it to snap the graphs from the Department
> of Labor website.
On Jun 05 09:23 AM tunaman4u2 wrote:
> What a number! Wow... Gold aint seeing profits today... neither oil...
> dollar strength? Hmm. Boy this is hard to figure out
"Surge in Labor Force Shows U.S. Workers Gaining Confidence
By Shobhana Chandra
June 5 (Bloomberg) -- The U.S. labor force posted the biggest back-to-back jump in six years, a sign Americans who’d quit looking for work are gaining confidence their search will pay off as the recession eases.
The labor pool rose to 155.1 million in May from 154 million in March, the largest two-month increase since January- February 2003, Labor Department figures showed today in Washington. The participation rate, or the share of people either working or looking for a job, climbed to 65.9 percent, the highest since October."
Full article at: www.bloomberg.com/apps...
The credit definitely shrunk in the month per the Fed - Consumer credit fell by $15.7 billion, or 7.4% at an annual rate, to $2.52 trillion. Credit crunch very very much with us.
On Jun 05 01:01 PM Moon Kil Woong wrote:
> It would be more helpful if someone published the agregate decrease
> or increase in total wages. Decreases in hours worked, decreases
> in the labor pool whether they ar disgruntled, discourages, seeking
> enploment, etc. makes no difference economically. What matters is
> the agregate amount of money circulating in total wages.
>
> The simple fact is economic analysts who don't get to the crux of
> the argument and spin trend in a single employment measurement are
> not worth their job title. Shame on them and the brokerages that
> employ them. Of course the government doesn't make figuring out this
> number easy for the simple fact that it always looks a lot worse
> than they would care for you to see.
On Jun 05 09:26 AM xsellside wrote:
> Can any explain or care to comment on why both of these charts are
> trending up in the long-run?
On Jun 05 01:01 PM Moon Kil Woong wrote:
> It would be more helpful if someone published the agregate decrease
> or increase in total wages. Decreases in hours worked, decreases
> in the labor pool whether they ar disgruntled, discourages, seeking
> enploment, etc. makes no difference economically. What matters is
> the agregate amount of money circulating in total wages.
>
> The simple fact is economic analysts who don't get to the crux of
> the argument and spin trend in a single employment measurement are
> not worth their job title. Shame on them and the brokerages that
> employ them. Of course the government doesn't make figuring out this
> number easy for the simple fact that it always looks a lot worse
> than they would care for you to see.
The number of manufacturing jobs in the US has been declining, but the main reason for that is improved productivity. This is a pitfall of relying on manufacturing - as capital investment increases worker productivity also increases, reducing the number of jobs needed. We already saw it reach an end point with the Green Revolution and a plunge in farm jobs post WWII. The same process is happening in manufacturing, and not just the US, but world wide.
Guess which country is losing manufacturing jobs the fastest.
The answer is China.
On Jun 05 08:55 AM Night_Rider wrote:
> The wealth of this country was built on manufacturing. And for at
> least the last 50 or so years manufacturing has been leaving the
> U.S. and has been relocated overseas to take advantage of cheap labor
> forces. Until manufacturing returns to this country I do not believe
> we will see this country rise and prosper again. We will remain in
> debt up to our duffs and will eventually become (more like) a third
> world country.
Had the regulators been on the job this economic collapse would, most likely, have not eventuated as it has.
regards.
On Jun 05 12:51 PM Anandakos wrote:
>
> Iowaboy,
>
> The process you describe has indeed been capitalism's "way out" of
> the conundrum that minimizing labor costs is to the advantage of
> any given firm, but maximizing employment is to the economy's advantage.
>
>
> Technological innovation has been the method by which the advanced
> economies have solved this problem: new products and processes led
> to new jobs to replace -- and more -- those lost to obsolescence.
> Unfortunately, what worked when the advanced economies had the only
> sophisticated workforces available to create the new products no
> longer does.
>
> What has derailed the process is that the United States and Britain
> have successfully taught our business methods to other nations --
> doing so was very generous -- and with widespread telecommunications
> availability and robots that do the highest-tech activities everywhere,
> borders and distance present only a tiny fraction of the limits to
> trade they once did.
>
> Therefore, innovation does not offer the advanced economies a way
> to grow their way out of recessions. The truth is, this big downturn
> is just the 2000 technology bust finally having its full effect.
> It was delayed for seven years by enormous inflation of the money
> supply and artificially low interest rates generated from the need
> of Asian exporters to do SOMETHING with their huge inflows.
>
> Innovation will continue to work for the gifted portion of humanity,
> but no longer will average people be able to share in its benefits.
> Though innovation itself may well largely stay in the advanced economies,
> the production of the actual goods created by it will increasingly
> migrate to lower-cost environments.
>
> The only thing that might reverse this trend is the cost and availability
> of transportation and distribution fuels but that will not happen
> for a decade or so. Individuals may not be able to drive as much
> as we have become accustomed to doing, but sufficient fuel to power
> the container ships will be available for the foreseeable future.
> The profits from labor arbitrage are too great.
>
> On Jun 05 09:25 AM iowaboy wrote:
my answer as to why both charts are trending upwards is that we, the USA, are becoming more and more of a welfare state.
On Jun 05 04:15 PM Charles Lieberman wrote:
> Good question. The data are not population adjusted. So over time,
> more people get hired, but also more people get fired and more people
> are unemployed and there are just...more people. Dynamite's figures
> are not population adjusted, so he thinks this is a "parabolic" curve.
>
www.chrismartenson.com...
If we were to start right now it would take AT LEAST five generation to make the US number one once again.
Don't judge the way that I write by what I say because I learned your language late in life, so that my English sucks lol.
One reason that most companies left the US is because of the unions and the high wages and deals that they enforced on the employers for their employees.
People make fun and talk about the wages being paid to the Chinise workers but you must remember that they can rent a house for $25.00 a months, a meal for .50 cents, power for $7.00 and so on... in the long run they are being better paid than most US workers.
I hold to the tenet that governments are in competition for skilled labor, and that freedom and well-planned infrastructure (like sewer systems) will encourage immigration of the most intelligent. When this country (the US) limits freedom via taxes and regulations, and exports Harvard graduates for lack of green cards, this government loses power.
With reasonable infrastructure becoming commonplace, borders are being made more irrelevant to skilled workers. I could go to the jungles of the Amazon, practically, and link up via satellite to work on projects.
Ciao
On Jun 05 12:51 PM Anandakos wrote:
>
> Iowaboy,
>
> The process you describe has indeed been capitalism's "way out" of
> the conundrum that minimizing labor costs is to the advantage of
> any given firm, but maximizing employment is to the economy's advantage.
>
>
> Technological innovation has been the method by which the advanced
> economies have solved this problem: new products and processes led
> to new jobs to replace -- and more -- those lost to obsolescence.
> Unfortunately, what worked when the advanced economies had the only
> sophisticated workforces available to create the new products no
> longer does.
>
> What has derailed the process is that the United States and Britain
> have successfully taught our business methods to other nations --
> doing so was very generous -- and with widespread telecommunications
> availability and robots that do the highest-tech activities everywhere,
> borders and distance present only a tiny fraction of the limits to
> trade they once did.
>
> Therefore, innovation does not offer the advanced economies a way
> to grow their way out of recessions. The truth is, this big downturn
> is just the 2000 technology bust finally having its full effect.
> It was delayed for seven years by enormous inflation of the money
> supply and artificially low interest rates generated from the need
> of Asian exporters to do SOMETHING with their huge inflows.
>
> Innovation will continue to work for the gifted portion of humanity,
> but no longer will average people be able to share in its benefits.
> Though innovation itself may well largely stay in the advanced economies,
> the production of the actual goods created by it will increasingly
> migrate to lower-cost environments.
>
> The only thing that might reverse this trend is the cost and availability
> of transportation and distribution fuels but that will not happen
> for a decade or so. Individuals may not be able to drive as much
> as we have become accustomed to doing, but sufficient fuel to power
> the container ships will be available for the foreseeable future.
> The profits from labor arbitrage are too great.
>
> On Jun 05 09:25 AM iowaboy wrote:
MarkitWacha,
I agree strongly with your prescription for investing overseas. Almost exactly half of my wife's and my equity investments are "international" (not "world" which usually has about 1/3 US).
And your remark about infrastructure is spot on. In many places in the world, infrastructure has surpassed that in the US. That's not surprising; what exists is typically newer than what is here.
However, I have to disagree with your statement about "export(ing) Harvard graduates for lack of green cards". Foreign Harvard graduates in the sciences and engineering generally have plenty of job offers from US corporations, especially since most are bi-lingual.
Most technological leaders who return to other countries are going for cheap, diligent laboer -- like the American capitalists from whom they've learned -- and in many cases because they want to give something back to their home country. Others go because they have better opportunities abroad.
There may be a few instances where a talented graduate does not connect with a desired job and is forced to leave, but the number is small.
Your English is good enough and Americans should be listening to you. Unions, executive titles handed down like inheritance, everything about this economy for decades has been about entitlement. The author's statements and many added comments have explained the despondent, labor outsourcing trends that generations have progressively adopted here. Nobody is too good to work their ass off, and those who manage without doing so are no better off for it. When this country was emerging and gaining power (not clawing and manipulating to hold on) did the top 1% account for 90% of its wealth? Were we obese? Did we borrow 4x what we make? Hmmmmmmm
And of course those charts are relevant, especially since our birth rate has tanked (too many narcotics or just broke?).
Lastly, the author may appreciate my blog post about jobs in poker going bye-bye.
On Jun 06 10:51 AM Ponce wrote:
> If the future is in hands of the childrens of today then only by
> changing the way that we educate them will we be able to have a tomorrow
> for without them there will be no tomorrow.
>
> If we were to start right now it would take AT LEAST five generation
> to make the US number one once again.
>
> Don't judge the way that I write by what I say because I learned
> your language late in life, so that my English sucks lol.
>
> One reason that most companies left the US is because of the unions
> and the high wages and deals that they enforced on the employers
> for their employees.
>
> People make fun and talk about the wages being paid to the Chinise
> workers but you must remember that they can rent a house for $25.00
> a months, a meal for .50 cents, power for $7.00 and so on... in the
> long run they are being better paid than most US workers.