05 March 2010

A Closer Look At Jobless Claims

MoneyWatch: New Claims for Unemployment Insurance Fall Slightly

Some analysts are noting that continuing claims fell to the lowest level in a year and hailing that as good news. But:

The number of people continuing to file claims declined to the lowest level in more than a year,… reaching 4.5 million. But when adding in those who filed emergency and extended benefits, the number was 10.5 million, just shy of a record set last month.

There is a lot of uncertainty in these numbers due to the weather and the fact that weekly data are inherently noisy (the four week average removes some of the noise and gives a bit clearer picture, but it’s still highly uncertain).

The main thing to note is that initial claims remain well above the approximately 400,000 level needed for the economy to begin creating jobs. As long as claims remain above 400,000, we are still losing jobs overall and labor markets continue to deteriorate. And even when claims do fall below 400,000 that won’t be the end of the labor market’s troubles.

It will take quite awhile to for labor markets to reabsorb all the workers that want jobs.

Looking at the numbers over the last several weeks in the graphs above, it’s evident that the labor market is moving sideways — there’s certainly no sign yet of an aggressive downward move. Thus, labor markets are stalled and continue to need all the help they can get. But so far, while the government has implemented some job creation programs, the programs have not been large enough to make a big dent in the unemployment problem.

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