Unemployment Initial Claims

Every Thursday the Bureau of Labor Statistics (BLS) compiles the initial claims for unemployment in each state.  It publishes both the raw figures and a “seasonally adjusted” (SA) number which accounts for anomalies like higher initial claims after the Christmas season is over and department stores lay off employees.  To smooth out the weekly numbers, it uses a 4 week moving average to get a truer trend of the number of people filing initial claims for UI.

Below is a 5 year history of these initial claims.  In the past few months, the number of initial claims has resumed its decline but a signal that the labor market is on a solid recovery path occurs when the 4 week average drops below 400,000.  As you can see in the graph, initial claims hovered around the 300,000 mark during the mid decade when the economy was more robust. (Click to enlarge in separate tab)

We often hear and read of comparisons of current unemployment with that of the 1982 – 83 recession.  A picture is a worth a 1000 words so I took a 3 year slice of the graph above and overlaid it on a graph of initial claims during the early 80s.

They look similar except that the current recession lasted longer than the 1982-83 recession.  In the past few years and in  the early 80s, intial claims climbed dramatically, then fell.  The comparison graph shows the important difference.  Unlike the early 80s, when initial claims continued to fall as the economy recovered, we have been “stuck” this year in a very slow decline of initial claims.

To understand the true severity of this downturn, however, we must really “zoom out” and look at total civilian employment, which includes government civilian workers as well. 

Unlike the recession of the early 1980s, the current downturn has seen a drastic decrease in total employment.  Although not technically a depression, we can say that this “past” recession was (and is) the mother of all recessions so far.

The graphs above are courtesy of the research division at the St. Louis branch of the Federal Reserve and are available quite easily to the general public.

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