Jobless Claims as Percent of Labor Force Fall for 3rd Month in a Row

With June employment data now available, the graph above of Initial Jobless Claims as a Percent of the Labor Force (1975-2009) has been updated to reflect the June labor force of 154,926,000 and the June average for initial unemployment claims (618,187.5 for the 4-week moving weekly average). That measure of initial jobless claims adjusted for the size of the labor force shows that we are currently above the levels of the last two recessions (1990-1991 and 2001), but still far below the levels of the previous three recessions in the mid-1970s and early 1980s.

For current initial jobless claims to reach the peaks of the 1970s and 1980s of about .60% (see chart above), we would have to have initial jobs claims today of about 929,000, or 50% above current levels. By this measure of the employment situation, it seems unlikely we'll get anywhere close to the recessionary levels of the 1970s and 1980s.

See related Scott Grannis post here.

Comments

[Steve Soden:]

Look, how can we trust the numbers our Government is putting out.
Adjustments to indexes are changed on a regular basis.
Our Economies are on the brink of collapse!
The best anyone can do is save as much as possible, turn 401 K's into cash and hope The Government can wash out our Systems and start over again.
We need a New Financial System that's built on making our Country better and not fueled by Greed for the few.

Jul 06 02:47 AM

[Steven Hansen:]

with the unemployment rate expressed as a percentage of the workforce at the second highest level since WW2, how do you square this with the graph you posted.

we need to all realize that the data is no longer correlating and it should be instinctive that an analyst would immediately recognize when data is not giving you the correct answer.

Jul 06 03:07 AM

[Moon Kil Woong:]

I agree with Steve Hansen that this data is misleading, however, I would not blame Mark Perry. Rather I would direct the blame towards the government agencies spewing useless and misleading statistics which often fails to provide proper analysis or rectification on charts and results they issue.

For some reason the believe lies and more damn lies are thesolution to everything these days. As they say, "The best lies are the ones closest to the truth." Misleading statistics serve that function all too well.

Jul 06 03:27 AM

[DavyJ:]

Considering that 467,000 jobs were lost in June, 618,000 initial claims seems reasonable. The difference, 151,000, would indicate that approximately 25 percent of those were able to find another job. Or some from June, some from May, etc.

Also, remember that there is no direct correlation between new claims and continuing unemployment. New claims could theoretically drop to zero and unemployment wouldn't necessarily have to show any decrease.



On Jul 06 03:07 AM Steven Hansen wrote:

> with the unemployment rate expressed as a percentage of the workforce
> at the second highest level since WW2, how do you square this with
> the graph you posted.
>
> we need to all realize that the data is no longer correlating and
> it should be instinctive that an analyst would immediately recognize
> when data is not giving you the correct answer.

Jul 06 10:10 AM

[Pat C:]

I really don't believe that initial claims is a good indicator anymore. Traditional employment has been drifting away for some time. The number of individuals that are independent contractors, part-time etc. etc. has grown extraordinarily in the last two decades.

Jul 06 10:42 AM

[Brian Bober:]

I think the author is correct, in a second derivative world this is a good signal. However, I agree with my fellow commentators that the currently reported data is not comparable to the 70s or 80s.

"Up until the Clinton administration, a discouraged worker was one who was willing, able and ready to work but had given up looking because there were no jobs to be had. The Clinton administration dismissed to the non-reporting netherworld about five million discouraged workers who had been so categorized for more than a year. As of July 2004, the less-than-a-year discouraged workers total 504,000. Adding in the netherworld takes the unemployment rate up to about 12.5%."

source: www.shadowstats.com/ar...

The Clinton administration didn't do this in secret; so I'm continuously surprised how few media outlets (none?) expend the small effort to make apples to apples comparisons.

Jul 06 06:31 PM

[ciel:]

The comments above pointing out that this series began losing its correlation with reality back in the 80s, and then effectively lost it altogether under the Clinton administration, is spot on.

It's unconscionable how some bloggers continue to sling this series around as some kind of "proof" that somehow "times aren't really all that bad!" and/or "the economy is on a genuine mend!"

Jul 07 03:51 PM