Today’s jobless claims report showed sizable declines in both initial and continued claims series yet initial claims remains near recessionary levels while continued claims including extended benefits appear to be continuing to mount.
Seasonally adjusted “initial” unemployment claims declined by 29,000 to 469,000 claims from last week’s revised 498,000 claims while “continued” claims declined by 134,000 resulting in an “insured” unemployment rate of 3.5%.
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 5.8 million people receiving federal “extended” unemployment benefits.
Taken together with the latest 5.54 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).