Wampum

Jobless claims fall to 3-month lows

(Reuters) — Applications for initial U.S. jobless aid plunged to three-month lows last week, the government said Thursday in a report showing a better-than-expected improvement in the still-weak job market.

The Labor Department said 404,000 idled workers filed for unemployment insurance payments in the June 21 week, down 22,000 from a revised 426,000 a week earlier and the lowest since March 22.

Well, it's about time! Pop out the champagne, thumb your nose at all those "jobless recovery" naysayers.

What do you mean that's not the whole story? You mean there's bad news too?

The advance seasonally adjusted insured unemployment rate was 3.0 percent for the week ending June 14, an increase of 0.1 percentage point from the prior week's unrevised rate of 2.9 percent.

The advance number for seasonally adjusted insured unemployment during the week ending June 14 was 3,741,000, an increase of 43,000 from the preceding week's revised level of 3,698,000. The 4-week moving average was 3,724,500, an increase of 5,250 from the preceding week's revised average of 3,719,250.

So while there were 22K fewer new claims, nearly twice as many people failed to find jobs, and so had to continue to draw unemployment benefits.

And since no Wampum day is complete without at least one reference to Bush I, should we take a quick peek and see if there are, once again, any similarities between Poppy and son on this issue?

[The x-axis represents the corresponding week during the 3rd year of the term.]

Not surprisingly, new claims peaked just after war with Iraq, and trended downward thereafter. But what the media seems to have missed, is that although an increase in new claims almost always results in a higher unemployment rate, a subsequent decrease in new claims need not have the same corresponding effect. Take the above chart, for example. In April, 1991, at the peak of new claims, the unemployment rate was 6.7%, up 1.5% from its low the previous spring [I put up a nifty graph back here, data courtesy of the BLS. But even as the number of new claims fell during the summer of '91, the unemployment rate continued to climb, albeit more slowly. This was due in part to the fact that although fewer people were losing their jobs, companies were still not hiring, and so new entrants into the job market, recent graduates, immigrants, moms returning to work, soldiers retiring from active duty, etc., while not laid off, were still counted, rightly so, as unemployed.

That the continued claims are still increasing should be a red flag to the current Bush Administration. Millions of students just graduated from high school, college and grad school, and will be pounding the pavement looking for work. If laid off experienced workers are still not finding jobs, and today's help wanted index is still at near record low levels, chances are the recent drop in claims will spell as much for job growth as it did in 1991.