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Brooks Wilson's Economics Blog: Initial Unemployment Claims for July 2, 2009

Thursday, July 2, 2009

Initial Unemployment Claims for July 2, 2009

On July 2, 2009 the Department of Labor released the most recent data on initial unemployment claims for the week ended June 27, 2009 in "Unemployment Insurance Weekly Claims Report." Seasonally adjusted initial claims was 614,000, down 16,000 from a revised estimate of initial claims of 630,000 for the week ended June 20, 2009. The 4 week moving average decreased 2,750 to 618,000. The average is down 43,750 from its peak, signaling a possible peak for this business cycle. Even though the average has declined, initial claims are still very high.[1]

Using National Bureau of Economic Research estimates on the beginning and ending dates of recessions, I have also included a graph that compares the recessions that began in March 2001, July 1990, and July 1981 with the current recession which began in December 2007. I have not attempted to adjust the data for changes in the size of labor market. The plots are measured over 93 weeks, beginning eight weeks before the recessions began. The horizontal axes begins in October 2007, the date the current recession began, and the data for the other recessions is superimposed on those dates. The graph gives some insight into why economists, politicians and others have expressed so much concern about the current recession. The current recession seems to have the depth of the 1981 recession but the 4 week moving average seems to be falling more slowly than it has in past episodes.

Because initial jobless claims remains high, the unemployment rate will continue to climb even if the economy crawls out of recession. Jeannine Aversa, an AP writer published by Yahoo News in "467K jobs cut in June; jobless rate at 9.5 percent," writes

Employers cut a larger-than-expected 467,000 jobs in June, driving the unemployment rate up to a 26-year high of 9.5 percent, suggesting that the economy's road to recovery will be bumpy.

The Labor Department report, released Thursday, showed that even as the recession flashes signs of easing, companies likely will want to keep a lid on costs and be wary of hiring until they feel certain the economy is on solid ground.

June's payroll reductions were deeper than the 363,000 that economists expected and average weekly earnings dropped to the lowest level in nearly a year.

However, the rise in the unemployment rate from 9.4 percent in May wasn't as sharp as the expected 9.6 percent. Still, many economists predict the jobless rate will hit 10 percent this year, and keep rising into next year, before falling back.

[1] Robert J. Gordon did research looking at the relationship between the 4 week moving average of initial unemployment claims and found that recessions often bottom out shortly after the 4-week moving average of initial unemployment claims peaks. The average may have peaked at 658,750 for the week ended April 4, 2009.


  1. Jason Haddock4/7/09 11:54 AM

    Although jobless claims started to rise more slowly than during past recessions, we can see that they have spiked and are now in line with the highs from the past. I believe unemployment will at least remain static but most likely continue to rise as the government continues to press legislation that will increase costs on manufacturers. Businesses will increasingly look to outsource or move operations completely to other countries. Americans will have fewer jobs in the domestic job pool. Also although illegal immigration has decreased and many illegals are leaving the US because of current economic situations, there are still a population of foreign undocumented and temporary workers that rob the domestic job pool of slots that Americans could and should fill. We seem to be in for a long road of decreasing jobs and increasing unemployment claims.

  2. Cameron Blenden5/7/09 11:51 PM

    I also have notice he job problems in the recent recession. I agree with Jason that the job issue is just going to continue to ise and be even a bigger issue as regulations and further government interventions cause vendors to outsource their work in other countries and illegals to take jobs away from United States citizens. THis problem seems easyto fix but it probly will not be fixed anytime soon as the urrent situations are just gonna keep causing jobless people to increase more and more till it peaks.

  3. Whitney Coffey6/7/09 1:32 AM

    Unemployment is frequently a problem within recessions because of the need for budget reforms. Is this essentially a budget surplus? Unemployment rates have a huge impact on economic standing, and therefore require governmental focus and involvement to maintain efficiency.