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Initial Unemployment Claims: Light at the End of the Tunnel? December 31, 2009

Posted by geoff in News.
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The initial unemployment claims data for December looks promising – around Thanksgiving we broke through the 500,000 claims/week barrier, and last week there were only 432,000 claims (seasonally adjusted). Here’s what the last couple of years look like:

So we’re still losing jobs, but at a slower rate. If we use the data since the peak to project when the unemployment rate itself might max out (when the line gets into the “Breakeven Zone”), we get this plot:

This suggests that the unemployment rate will peak somewhere between May and August. The recent weeks, however, have shown a slightly sharper decline – if that trend holds we could peak as early as the end of March. That would be nice.

I was looking at the seasonal adjustments to these claims, and compared the 2008 and 2009 adjustments at the end of the years (when seasonal adjustments are large). Naturally I plotted up the comparison:

They track very closely until the end of the year, when the correction for 2009 is significantly smaller than for 2008. If the corrections were the same, we’d see an even lower initial claims number. I’m sure they have their reasons, but I thought it was interesting so I decided to inflict it on you.

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Comments»

1. geoff - December 31, 2009

S. Weasel tells me, BTW, that she’s made $11.90 in royalties off the unemployment chart products.

A commercial success rivaling the legendary AoSHQ t-shirt sales.

2. Dave in Texas - December 31, 2009

I am eagerly awaiting my coffee cup.

This is going to take off like gangbusters. Whatever those are.

3. Michael - December 31, 2009

Wait a minute, I saw a comment at Weasel’s site where she claimed her first check was over $40!

That crafty Mrs. Peel, I might add, was conniving to get a 1% share based on the fact that she had something to do with the guy who suggested you merchandise The Chart. I personally am contemplating throwing my own hat in the ring for a share of the loot, based on all the emails I sent pimping the chart to various internet mucketymucks. I tell ya, my poor fingers are still sore.

You were unwise, Geoff, to waive any claim to all this booty.

4. Michael - December 31, 2009

I still have, and wear, my AoSHQ T-shirt, by the way.

5. MCPO Airdale - December 31, 2009

So, how does this relate to job expansion? It doesn’t. Most companies have cut payroll to bare bones. Is anyone hiring? Not around here. And, what about those people whose benefits have run out? I guess since they don’t show up in the numbers, it’s OK to ignore them.

6. Retired Geezer - December 31, 2009

I still have, and wear, my AoSHQ T-shirt,

Me too, I’m planning on wearing it to the next IB gathering.

7. lauraw - December 31, 2009

I’d like to see a similar chart tracking small business closings, but I’m not sure the Gov’t really could track that with any week-to-week accuracy.

8. Michael - December 31, 2009

I think there is data on small business bankrupties, which would kinda tell you the same thing in terms of the trend.

9. geoff - December 31, 2009

So, how does this relate to job expansion?

That’s what the 2nd chart is trying to show. when the line hits the blue region, we’re no longer losing jobs. When it goes below the blue region, the unemployment rate should be dropping.

10. DRJ - January 1, 2010

I understand that there are fewer jobless claims but what does that tell us? Have more people found employment, or have more people stopped looking for jobs?

11. Michael - January 1, 2010

Have more people found employment, or have more people stopped looking for jobs?

The data on unemployment claims does not answer those questions. It just means fewer people are getting laid off, providing additional hope that the recession may have bottomed out.

That still leaves a huge mass of unemployed and underemployed people out there, that will be dead-weight dragging on the economy for at least a couple of years. In general, employment statistics are a lagging, not a leading, indicator of economic health.

12. DRJ - January 1, 2010

Thanks for your response, Michael. That makes sense but 20M unemployed people is a huge dead-weight.

13. Jerry in Detroit - January 6, 2010

One must add the caveat that these projected figures are dependent on Congress and our President doing no further damage to the economy. My estimate is that they just can’t help themselves. They’ve got to DO something and whatever they do will make things worse; a lot worse.

14. Mrs. Peel - January 6, 2010

Oh, by the way, something people keep ignoring in economic discussions: if we saw improvement at the end of 2009 in the stock market, a lot of that could be attributed to people getting rid of their assets before the tax hike this year.

15. Michael - January 7, 2010

I think WordPress changed something. We are suddenly getting a ton of “Home Page” hits on the stat page of the Dashboard, rather than hits on specific posts. This has never happened before. In the “Top Posts” sidebar, this sometimes shows up as hits to random posts over the last four years. Go figure. There is probably a WP forum on this right now, but I’ve been too lazy to look it up.

16. Mrs. Peel - January 7, 2010
17. wiserbud - January 7, 2010

Mrs. Peel is an illegal alien?

18. geoff - January 7, 2010

December unemployment numbers come out tomorrow. I don’t know what to expect, so I’m very curious as to what they’ll show.


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