Today’s jobless claims report showed another significant surprise jump in initial claims bending the trend somewhat and throwing into question what would otherwise look like a nearly textbook peak.
Seasonally adjusted “initial” unemployment claims jumped by 22,000 to 496,000 claims from last week’s revised 474,000 claims while “continued” claims increased by 6,000 resulting in an “insured” unemployment rate of 3.5%.
It's important to note that at nearly 500K claims, initial claims is at the highest level seen since November 2009 and taken together with the federal extended claims data, offers a dire view of the state of the job market and of the economy as a whole.
Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.
Currently there are some 5.6 million people receiving federal “extended” unemployment benefits.
Taken together with the latest 5.6 million people that are currently counted as receiving traditional continued unemployment benefits, there are well over 11 million people on state and federal unemployment rolls.
The following chart shows the recent trend in initial non-seasonally adjusted initial jobless claims with the year-over-year percent change acting as a rough equivalent of a seasonally adjustment.
Historically, unemployment claims both “initial” and “continued” (ongoing claims) are a good leading indicator of the unemployment rate and inevitably the overall state of the economy.
The following chart shows “population adjusted” continued claims (ratio of unemployment claims to the non-institutional population) and the unemployment rate since 1967.
Adjusting for the general increase in population tames the continued claims spike down a bit.
The following chart (click for larger version) shows “initial” and “continued” claims, averaged monthly, overlaid with U.S. recessions since 1967.
Also, acceleration and deceleration of unemployment claims has generally preceded comparable movements to the unemployment rate by 3 – 8 months (click for larger version).