Thursday, February 25, 2010

Extended Unemployment: Initial, Continued and Extended Unemployment Claims February 25 2010

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).


  1. hey my man....been a while...see your still fight'n the good fight.
    excellent work SATT.

    i still believe you are right.
    it's a slow sand papering that's taking place.. dont throw out the "two Great Bounces" it still needs the finish.. which WILL come.

    The fraud is starting to come to light more and more with each week gone by.

  2. Static,

    Hey! Good to see you... its been a long time... things are going just swell!

    Well... the realist point of view has been under pressure lately for sure but there is some vindication in the trends.

    New home sales just broke below last years (temporary) low... an outcome that not many saw coming...

    I suppose the government stimulus really is just not the way out of this mess... its a grind down no matter how hard they try.

    So I think we might need to fasten the seat belts for 2010!