What do Low Unemployment Insurance Claims Tell Us?

Posted on by

Scott Sumner raises the issue.

with today’s numbers (308,000 on the 4 week average) we have fallen below the 0.1% level, meaning that fewer than 1/1000ths of Americans now file for unemployment comp each week. That’s not just boom conditions, it’s peak of boom conditions. The only other times this occurred since 1969 (when unemployment was 3.5%) were just a few weeks at the peak of the 2000 tech boom and a few weeks at the peak of the 2006 housing boom. In other words, the puzzle is now even greater than 6 weeks ago, as the unemployment rate is still at recession levels (7.3%.) Something very weird is going on in the labor markets.

Some possibilities:

1. We are in a “slow-churn” economy, with fewer jobs being created or destroyed.

2. The financial crisis time-shifted layoffs from 2010-2013 back to 2008-2009. Without the financial crisis, firms would have gradually noticed that they were carrying unproductive workers. The financial crisis made them realize this suddenly. By now, the companies are lean and do not need to shed anyone. As a result, the unemployment rate, instead of climbing steadily from 5 percent to 7 percent, first overshot and is in the process of dropping back.

3. Michael Mandel is right, and the unemployment rate is poised to drop swiftly.

4 thoughts on “What do Low Unemployment Insurance Claims Tell Us?”

  1. Long term unemployed are still at highs, just not as high as they have been, and no longer qualify for benefits so have no reason to apply. The unemployment rate will continue to drop but as much from dropping out of the labor force as hires. Retires and new entrants should balance so growth should lead to hiring.

  3. Temporary workers get reassigned by the temp agency before they are laid off. The lay offs have actually been delayed.

  4. “Only” 1/1000 of the total population applies for unemployment each week. That is 5% of the population each year, being about 9% of the working population. That is plenty to kill the economy.

    The question is how many are hired again, at what wages, and with what delay, not the absolute fraction of people looking for another job.

    EasyOpinions

Comments are closed.