Unemployment claims falling faster than in half of past recessions
The U.S. Department of Labor released the Unemployment Insurance Weekly Claims Report showing that initial jobless claims decreased 10,000 in the latest week to 570,000 from an upwardly revised 580,000 the week prior. The 4-week moving average is now 566,250, less than 100,000 off the April peak.
Since the week ended Jul. 18, the average initial claims figure has been hovering in the 560-570,000 range. So, this marks six straight weeks during which we have seen no discernible improvement in the employment picture painted by jobless claims data.
It is now 20 weeks since initial jobless claims peaked and we are shedding only 92,500 fewer jobs. I found this quite worrying until I compared it to previous recession, demonstrating that the last two jobless recoveries had a similar dynamic. Even in the recessions of 1970 and 1974-75, jobless claims were slow to fall.
Below is a comparison of the 20-week fall during previous recessions:
- 2001: 92,750. Oct. 20, 2001 peak of 489,250 vs. Mar. 9, 2002 figure of 396,500.
- 1991: 68,500. Mar. 30, 1991 peak of 501,250 vs. Aug. 17, 1991 figure of 432,750.
- 1982: 185,500. Oct. 9, 1982 peak of 674,250 vs. Feb. 26, 1983 figure of 488,750.
- 1980: 179,750. May 31, 1980 peak of 629,000 vs. Oct. 18, 1980 figure of 449,250.
- 1974: 61,250. Feb. 1, 1975 peak of 560,750 vs. Jun. 21, 1975 figure of 499,500.
- 1970: 25,250. May 9, 1970 peak of 343,750 vs. Sep. 26, 1970 figure of 318,500.
If one looks at these numbers in percentage terms, the fastest job recovers in order are:
- 1980: 28.6%
- 1982: 27.5%
- 2001: 19.0%
- 2009: 14.0%
- 1991: 13.7%
- 1974: 10.9%
- 1970: 7.3%
So, contrary to my expectations, the fall in unemployment claims is very much in line with what we have seen in recessions over the previous 40 years.
So 20 weeks after the peak, initial claims are still higher than peak in all except the 1980 and 1982 recessions.
On a percent basis its 80, 82, and 2001 that saw better snap backs. That puts us in the middle as opposed to what I would have expected is at the bottom.
Edward,
Perhaps you should worry. Those two jobless recoveries morphed into huge financial bubbles. Coincidence?
The initial claims data doesn’t worry me. It is the length of unemployment and the number of people exhausting benefits. I will try and look at the data there and see if it paints another picture.
Ed Great website. How does tax withholdings compare to past recessions?
I see the current withholdings are down something like -10.70%
This appears to be a large number.
Nice analysis; thanks, Ed.
What if you turn the data another way and look at how quickly initial claims are returning to the previous baseline? In other words, the 2001 recession was mild, so a 19% drop from the worst level brought it I would think much closer to the starting level than the current one.
In another vein, did it not still take over 2 yrs from the end of the 2001 recession for total employment to reach its prior peak? What would your projection be on that metric (if you have one), and how does that compare to prior recoveries?
Thanks!
That is a good suggestion. I will look to do this next week. I also want to look at continuing claims and the exhaustion of benefits. The evidence seems to indicate it is slow hiring, rather than massive job cuts that makes this recession especially severe.
Thanks
Sounds right re layoffs-
Healthcare only sector not down-sizing
A friend is a director of a mid-sized old-line public company.? The stock is up 5X since the March low.? Market value is about 20X tangible book.? Nominal dividend that it can’t afford.? Worsening losses and worsened earnings estimates.? Internally, the company, which makes discretionary consumer products stuff, projects no turn in business till 2011.? They may not survive!? For sure they will not hire till there is a durable improvement in their business.? IMO their stock price was reasonable at its March pricing.?