Friday, May 8, 2009

The Ying and Yang of the Unemployment Numbers

US unemployment climbed to 8.9 per cent in April, the highest level since 1983.

The latest non-farm payrolls data showed that another 539,000 jobs were lost in April compared with a revised 699,000 the previous month. It was the smallest monthly loss total since last October.

As we have pointed out, unemployment is a lagging indicator, so this unemployment news should come as no surprise.

However, the number of US workers claiming unemployment benefits, which is a leading indicator, declined for the first time last week to the lowest level since January.

How can unemployment climb, when those claiming unemployment benefits declines?

If 100,000 people claim benefits for the first time, down from, say, 200,000, but only 50,000 of those who have been unemployed find new jobs, then although new claims are down unemployment is up by 50,000 (100,000 minus 50,000).

Bottom line: There is nothing in the current numbers that is not in line with a recovering economy.


  1. So Bob... nothing about the number bothers you? You don't mind the irrational "seasonal adjustment" knocking 65K jobs off the total? No problem with the fact that 60K of the new jobs were Census (temporary) workers? And did you notice the adjustment to Feb (+30K more unemployed) and Mar (+30K more unemployed)?

    Yes sir... one heck of a recovery we have headed our way. I'm just not sure your definition of recovery matches other peoples definition of recovery.

  2. @ SteveInOhio

    Last I looked at my post, I think I said there was no problem with climbimg unemployment at this point, since unemployment is a lagging indicator.

    Since the BLS says unemployment is up, why would I waste my limited time trying to prove the exact degree by which they are up, when I fully expect unemployment to be up?

    Any of these numbers project only trends, it's only the wacko econometricians that think there is exactness to the numbers.

    From your comment, I gather you are trying to get an exactness that is not possible, and again unemployment is a lagging indicator.

    You are never going to be a great forecaster watching unemployment, it lags big time.

    That was the point of my "The Recessio Is Over" post.