Initial jobless claims fall to a 17-month low

Initial jobless claims of 432,000 for the week ended 26 Dec 2009 were the lowest since July 2008. The 4-week average is now 460,250, the lowest since September 2008. If you look at the following two graphs, you can see that initial claims are plummeting.



The second chart shows that the change in initial jobless claims is well into recovery territory. Average unadjusted weekly claims are running at 120,000 below last year’s level. Seasonally-adjusted claims are running at only 80,000 below last year’s numbers – evidence to me that the headline adjusted numbers are deceptively high. 

Either way, you don’t get that sort of drop without a technical recovery.  So, I may be tipping my hand on the last post here, but I don’t see how one could argue we aren’t in recovery when even the employment market reflects this.  It is the enormous debt loads and the structurally high levels of unemployment which makes this technical recovery an unhappy one.



Unemployment Insurance Weekly Claims Report – U.S. Department of Labor

  1. haris07 says

    Aah! But EUC was up nearly 200k for the week ended Dec 12 to 4.5mm. I am not saying that everything id horrible, there is probably a modicum of recovery (or at least stabilization), but to interpret one number as a positive data series while ignoring that more and more folks are going to EUC is misleading.

    I understand the rush to claim a recovery (and clearly the govt wants that), but paying closer attention to the data seems to reveal a far less positive situation (the Chicago PMI was at a record almost solely due to expectations surging while current situation actually worsened a little).

    Not to be the nattering nabob of negativity, but I think people should call this stabilization, not a full blown recovery.

    1. Edward Harrison says

      haris, time will tell when this recovery gets dated.I have said in the past that a definitve read on recovery won’t be available until Fall 2010 because the dating committee likes to be sure. But all of the numbers line up toward recovery. Read my post on technical recovery linked above and that will tell you all you need to know.

      I should add that GDP, personal income, retail sales and production all point in this direction as well.

      1. haris07 says

        Doesn’t matter whether it is called a “recovery” by some dating committee or NBER. Also doesn’t matter if it is technical. My point is to only suggest that there is no real recovery because the supposedly good and improving numbers that are reported by the MSM have a darker side to them which is conveniently ignored – see my point on EUC and also on Chicago PMI. So, whether “initial” claims fall is besides the point, a true recovery (or something to be even labeled a “recovery”) would result in falling initial claims w/o the substantial increase in EUC (which has been extended and extended in many states). Things appear to have stabilized and there is a slow recovery off the lows – that’s all. Any cliams of lower unemployment is balderdash because the unemployed have just moved from one “bucket of reported numbers” to another bucket – they are still unemployed and in fact worse off becaus ethey have exhausted their initial period to claim unempoloyment and moved on to the “emergency” claims.

        1. gaius marius says

          semantics are going to be a big sticking point this go around because i think it’s increasingly clear we’ve passed peak credit and our situation going forward will be unlike what it’s been in the past dozen recessions.

          i think edward is right re a technical recovery — but as he himself has often said it won’t look like what bulls are expecting. we have a strong inventory correction cycle (the kind that must follow a full-stop in production as we saw in 4q2008) augmented by a pile of stimulus.

          that isn’t a traditional recovery, where low yields spur an expansion of credit. you can observe fed metrics on bank balance sheets and the securitization market to see that we’re delevering. (europe too.) and when inventories have been rebuilt (as they mostly have) and stimulus both fiscal and quasi-fiscal run off (as they now are)….

          anyway, even if it isn’t a recovery in the commonly understood sense it IS as much a recovery as we might hope for — some will call it that and others will refuse, but that’s semantic.

    2. Onlooker from Troy says

      Agreed. While falling initial claims is good news, the ever increasing EUC numbers, the number falling off UE completely, the number just outright dropping out of the work force, and the anemic hiring, all portend a sick job market going forward.

      And we may just see a pick up after the holidays as businesses (especially retail) that have been hanging on by their fingertips finally burn through all their cash and credit lines and have to hang it up.

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