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Economy in Brief

U.S. Initial Claims For Jobless Insurance High and Stable
by Tom Moeller February 19, 2009

The U.S. labor market continued quite weak as the Labor Department indicated that initial claims for unemployment insurance remained stable last at 627,000. The prior week's figure was revised up slightly. The latest level again surpassed Consensus expectations for 620,000 initial claims. Initial claims continue to be the highest since late during the sharp recession of 1981-82. During that recession, real GDP fell by 2.9% peak-to-trough.

The latest initial claims figure is for the survey week for February nonfarm payrolls. Claims rose 42,000, or 7.2%, from the January survey period. During the last ten years there has been an 83% (negative) correlation between the level of claims and the month-to-month change in nonfarm payrolls.

The Labor Department indicated that in the week ending February 7, the largest increases in claims were in Kentucky (+8,419), Arkansas (+4,142), Illinois (+3,630), Texas (+3,392), and Missouri (+3,217), while the largest decreases were in California (-5,249), Tennessee (-1,718), Iowa (-1,413), Connecticut (-1,267), and South Carolina
(-1,059).

Labor market stress was further indicated by a huge 170,000 increase in continuing claims for unemployment insurance to 4,987,000. The latest was another record. The series dates back to 1966. The four-week average of continuing claims rose 92,500 to 4,839,500. Continuing claims provide some indication of workers' ability to find employment and they lag the initial claims figures by one week.

Though the latest level of continuing claims was a record, the labor force has grown as well, by more than 27% over the last twenty years. Therefore, the insured rate of unemployment was not at a new high. It ticked up to 3.7% which was the highest since 1983. During the last ten years there has been a 93% correlation between the level of the insured unemployment rate and the overall rate of unemployment published by the Bureau of Labor Statistics. The lower level of the insured unemployment rate versus the BLS figure reflects, among other things, the self-employed. The highest insured unemployment rates during the week ended January 31 were in Michigan (8.1 percent), Idaho (7.0), Oregon (7.0), Pennsylvania (6.4), Wisconsin (6.3), Nevada (5.9), Alaska (5.8), Montana (5.6), Rhode Island (5.6), and Indiana (5.5).

The unemployment insurance claim data is available in Haver's USWEEKLY database.

Deciphering the Liquidity and Credit Crunch 2007-08, published by the University of Princeton, can be found here.

Unemployment Insurance (000s)  02/13/09 02/06/09 01/30/09 Y/Y 2008 2007 2006 
Initial Claims 627 627 631 83.3% 420 321 313
Continuing Claims -- 4,987 4,817 79.8% 3,342 2,552 2,459
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