Initial Unemployment Claims for September 12, 2009

On September 17, 2009 the Department of Labor released the most recent data on initial unemployment claims for the week ended September 17, 2009 in "Unemployment Insurance Weekly Claims Report."  Seasonally adjusted initial claims was 545,000, down 12,000 from a revised estimate of initial claims of 557,000 for the week ended September 5, 2009. The 4 week moving average decreased 8,750 to 563,000. The average is down 95,750 from its peak, signaling a possible peak for this business cycle. [1]

Using National Bureau of Economic Research estimates on the beginning and ending dates of recessions, I have  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 106 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.

Shobhana Chandra of Bloomberg writes in, "U.S. Initial Jobless Claims Fell to 545,000 Last Week (Update1)," that

The job market may be starting to stabilize as government and private reports reinforce forecasts that economic growth will resume this quarter. Economists surveyed by Bloomberg this month said the unemployment rate will reach 10 percent this year, a reminder that hiring may not pick up for several months and that consumers likely won’t lead the recovery.

“It’s nice to see another move down in initial claims but the continuing number is definitely kind of sticking at pretty high levels,” said Michael Feroli, an economist at JPMorgan Chase & Co. in New York. “As long as we’re continuing to see pretty high initial and continuing claims, we’ll still have negative job growth.”

[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.