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!