Jobless claims back to 551,000; employment missing link to recovery
Today’s jobless claims report should dispel the notion that the labor market in the United States is getting significantly better. Initial jobless claims rose again to 551,000 from 534,000 the week prior. The 4-week average is still an exceedingly high 548,000 and continuing claims are over 6 million (All figures are seasonally-adjusted. Chart is below).
The silver lining is unadjusted claims. They came in at 443,000 last week, marking the seventh consecutive week in which unadjusted initial claims were below 500,000. As layoffs have declined in this business cycle, I do not expect this number to tick as high relative to the seasonal low around Labor Day as it usually does throughout the business cycle. What that means is that the seasonal adjustments may be overstating the jobless claims number, which I expect to fall well into the 400s by year-end.
My overall take on these numbers leading into tomorrow’s unemployment number is this: The labor market is extremely weak because of a paucity of jobs not because of a torrent of new layoffs. There are 5-6 job applicants for every job opening. This means that the unemployment should tick higher, reaching at least 10% before it starts to recede. When the unemployment rate does recede, the decline will be slow due to the ability of firms to increase the productivity of existing workers (record-low hours worked and a glut of available temporary workers precede any new hiring). This necessarily means that the economy will be vulnerable to exogenous shocks (think protectionism, terrorism, etc). So, for the foreseeable future, the employment market will be the missing link to full economic recovery.
About Edward Harrison
- Both initial claims and continuing claims now pointing to recovery 21 May 2009
- Revisiting employment indicators for signs of recovery 10 Aug 2009
- Jobless Claims down, continuing claims way up 11 Sep 2008
- U.S. jobless claims: Claims rise 62,000 to 589,000 22 Jan 2009
- Jobless claims still above 600,000 2 Jul 2009
Do you have any thoughts about whether this employment weak link will lead to another “stimulus” plan being enacted?
I think stimulus is dead. It’s a political non-starter because of the deficits. Only if we see a relapse of major proportions are we likely to see any stimulus.
Thanks, Ed
I appreciate all the work you do, including the first-class Links.
thanks DoctoRx. I owe you some links for later today. They ARE coming!