Unemployment Improving? Not So Fast


First, we have a look at the actual report issued today (upon which the media is slobbering all over themselves cheerleading), from Karl Denninger over at The Market-Ticker:

Claims: Hmmmm.. Do I Believe Them?


In the week ending Feb. 26, the advance figure for seasonally adjusted initial claims was 368,000, a decrease of 20,000 from the previous week’s revised figure of 388,000. The 4-week moving average was 388,500, a decrease of 12,750 from the previous week’s revised average of 401,250.

That’s legitimate improvement.  It suggests we’re getting close to a zero job-loss rate (but unfortunately, that’s also a zero job-gain rate, and we’re still adding ~100,000 people a month coming into the workforce.)

Nonetheless it’s a good number.

The full picture from the middle of the month, however, is more problematic:

There’s a problem here though in that the week related to in this table showed 410k.  That was up a bit, but the fact remains that we’re +74k on this chart, and it’s all in extended benefits.

We’ll see what tomorrow comes up with in the employment report.  I’m not biting on the ADP number; there are a lot of people who are, but not me.  I’m looking for +100k but with a larger-than-normal error band, +/- 50k, and a flat to slightly-down household participation rate.


We’ll see how I did tomorrow.

So, a solid ‘maybe’ there’s some improvement in this single report. 

Next let’s consider a report out published at Investors Daily and look at the bigger picture:

Layoffs At Pre-Recession Level; Job Openings Down 30%

Twenty months after the worst recession in decades, job creation remains anemic, weighing on economic growth and making it even harder for the long-term jobless to find work.

Don’t blame layoffs. They spiked in 2009 but have returned to pre-slump levels, according to Labor Department data. But job openings remain 30% below their level when the downturn hit in December 2007. Gross hiring is down by 843,000 jobs.

While the economy has grown modestly in recent quarters, hiring remains depressed due to uncertainty about future demand, concerns about government policies and efficiency gains that have let companies do more with less.

“It’s the drop in job openings, not the increase in job losses that is responsible for so much of the increase in unemployment,” said James Sherk, a labor policy analyst at the Heritage Foundation.

Labor is expected to report Friday that the U.S. added a net 183,000 jobs in February, the most since last May. The jobless rate is seen ticking up 0.1 point to 9.1% as more people entered the labor force. Many of those new or returning job-seekers will likely find only disappointment.

December job openings fell by 139,000 to 3.06 million, the third straight decline, according to Labor’s Job Openings and Labor Turnover Survey. January’s JOLTS survey is due March 11.

There were 4.7 job-seekers for each opening in December, off a peak of 6.3 in July 2009 but still far above the 1.15 ratio typical before the recession, according to the Economic Policy Institute.

“We are still very near the bottom of a very huge crater,” said Heidi Shierholz, an EPI labor economist.

The U.S. has expanded for six quarters, but growth has been modest by historical standards. Strong head winds remain, from a still-moribund housing market to $100 oil and looming fiscal tightening at all levels of government.

Uncertainty about ObamaCare costs have also made firms cautious about hiring, analysts said.

Uh, now that’s not so good.  While companies may have slowed their actual layoffs, new people continue to come into the work force unabated, and cannot find work.   What tempers the government reports is that people who finally give up after months or sometimes years of looking are not counted in their figures.  I don’t know about you, but if I couldn’t find work in two years, it would sure be adding insult to injury to not be included in the unemployment figures.

Now let’s look at some charts from the new Gallup report:


This makes it pretty clear that the employment situation has been deteriorating anew since November 2010.   It is essentially back to the levels of January last year.

Finally, we go to what I consider most reliable, ShadowStats:


The red line is the official government unemployment number (U3), the grey line is the old government measurement of unemployment (U6), which used to include all people, including those who have given up, and the blue line is ShadowStats proprietary measurement (SGS).   

I’d say that REAL unemployment is now just shy of 20% nationwide.  Remember, for historical reference, at the peak of the Great Depression, unemployment reached 25%.

Unemployment improving?  I don’t think so.