Unemployment charts: A perspective

posted at 9:30 am on April 19, 2010 by Ed Morrissey

Over the weekend, I published what I called the Unexpected Unemployment Chart of the Day from Uncommon Misperceptions.  The chart shows that the trend on initial jobless claims has not improved since November, and in fact the trendline shows a slight increase since that point, despite media and White House spin on supposedly improving job numbers.

After publishing the chart, I got several e-mails criticizing me for (a) not having cited the reference for the origin of the numbers, which is more a criticism of Uncommon Misperceptions, and (b) not having shown the entirety of 2009 to show that the job market did improve.  In order to answer both criticisms, I downloaded the numbers myself from the Department of Labor (which doesn’t make it easy, by the way) and created my own spreadsheet for initial jobless claims data.  I then created a few charts showing some of the context which critics claimed was missing from this particular chart.

First, let’s look at the data from the beginning of 2007, before the recession began, and establish a baseline:

Even throughout 2007, as the economy slowed, initial jobless claims didn’t rise above the “floor” of 325,000 that most economists consider the point where net job creation ends.  There was a huge burst of initial claims in the fall and winter of 2008/9, but even after that we’ve never approached that floor, or even come close to it.

Now let’s look at the data since the beginning of 2009, which critics complained was ignored:

Obviously, the trend line will show a decline, since we’re seeing the peak of the initial claims during the winter of 2009. Bear in mind that the Obama administration’s stimulus package was passed in February but didn’t really start spending until the third quarter of 2009, though.  This is what UM’s chart shows, but it left off October.  Let’s restore it:

With October added, the trendlines do show a slight decline (I added a trendline for non-seasonally-adjusted claims, just to test the seasonal adjustments).  But that decline is much shallower than the one shown for the chart starting in January 2009, which strongly suggests that the bulk of the slowdown occurred prior to Obama’s stimulus taking place.  Also, remember that unemployment is cumulative — which means for a situation to actually improve rather than just being less bad, we need net job creation — which we still haven’t had or come close to reaching.

Now let’s look at just 2010, after the stimulus package has been in place, to see whether we’re maintaining that momentum:

That’s slightly more than a full quarter, and the trendline has almost flattened out.  The situation has not improved; the normal run of eliminating the most at-risk jobs took place in a big recession.  Job losses always slow down after the most at-risk jobs get terminated, simply because it’s tougher to eliminate jobs as layoffs continue.  We aren’t seeing a rebound in net job creation, at least not yet, and it’s at least two quarters overdue, in the context of all other post-WWII recessions.

That’s the point that Uncommon Misperceptions made, and it’s still correct.

Update: On the legends, IC-NSA means “initial claims, non-seasonally adjusted,” and IC-SA means “initial claims, seasonally adjusted.”  IC-SA is the measure commonly used.


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As an economist I can graph anything i want. The most massive factor that people ignore is the cost of crude. as crude went up, food, transportation went up and car sales dropped. Construction costs went up and there was a trillion less to spend on other consumer products and house payments. When people have no money left on payday and credit cards are maxed, paying more for fuel triggered a persoanl insovency crisis.

seven on April 19, 2010 at 9:42 AM

Obama is as ignorant as Jimmy Carter on economics.
One factor we hear little of is the drop in the value of equities. They peaked at 57 trillion dollars and went toward 40 trillion dollars. If the stock market went much closer toward previous highs, people take risks and sell a few shares to buy an rv, boat or remodel. Companies do IPO’s and raise money to spend. With the black cloud of mark to market, banks are punished if they take risks.

seven on April 19, 2010 at 9:47 AM

More charts please!

Akzed on April 19, 2010 at 9:50 AM

So Ed, I’m no economist.

What I have learned from the first graph:

When Obama talks up the economy it goes down – each time.

Why didn’t this work in reverse when he talked down the economy between Nov. ’08 and Jan. ’09?

cane_loader on April 19, 2010 at 9:51 AM

Typical; the Lamestream Media prints, or says, anything and it’s taken as gospel. Anybody else (read-you don’t agree with our politics) and you have to actually prove your point? But we always do. How much longer is this gonna go on? Remember in No-vember!

Deckard on April 19, 2010 at 9:51 AM

So the critics fell victim to a common misperception?

SlaveDog on April 19, 2010 at 9:52 AM

The Chief economist is
Rosie Scenario PhD.

seven on April 19, 2010 at 9:52 AM

“When B. H. Obama speaks,
[expectant silence]
people LOSE THEIR JOBS!”

cane_loader on April 19, 2010 at 9:55 AM

As an economist I can graph anything i want. The most massive factor that people ignore is the cost of crude. as crude went up, food, transportation went up and car sales dropped. Construction costs went up and there was a trillion less to spend on other consumer products and house payments. When people have no money left on payday and credit cards are maxed, paying more for fuel triggered a persoanl insovency crisis.

seven on April 19, 2010 at 9:42 AM

Many people won’t go there, but one of the main reasons for the explosion of debt and credit which helped the recession come about was….$4 a gallon gasoline.

uknowmorethanme on April 19, 2010 at 9:56 AM

As an economist I can graph anything i want. The most massive factor that people ignore is the cost of crude. as crude went up, food, transportation went up and car sales dropped. Construction costs went up and there was a trillion less to spend on other consumer products and house payments. When people have no money left on payday and credit cards are maxed, paying more for fuel triggered a persoanl insovency crisis.

seven on April 19, 2010 at 9:42 AM

Many people won’t go there, but one of the main reasons for the explosion of debt and credit which helped the recession come about was….$4 a gallon gasoline.

uknowmorethanme on April 19, 2010 at 9:57 AM

If you’d like up the stakes in the transparency game with the critics, you might consider uploading the data you collected on a site like IBM’s ManyEyes, which provides a lot of free tools for visualizing data.

ironman on April 19, 2010 at 9:58 AM

But the important question is where oh where did our familiar unemployed red head go?????

search4truth on April 19, 2010 at 9:58 AM

Nice graphs, Ed, very interesting. Looks like the best case the WH can make is that new unemployment claims are “only” as bad as they were during the 08 elections — when the poor economy was one major factor assisting the Democrats to gaining total control in Washington.

jwolf on April 19, 2010 at 10:02 AM

But the important question is where oh where did our familiar unemployed red head go?????

search4truth on April 19, 2010 at 9:58 AM

She could probably get a job crunching data for Ed.

jwolf on April 19, 2010 at 10:03 AM

Well done, Ed.

Weight of Glory on April 19, 2010 at 10:08 AM

Many people won’t go there, but one of the main reasons for the explosion of debt and credit which helped the recession come about was….$4 a gallon gasoline.

uknowmorethanme on April 19, 2010 at 9:56 AM

Yes $4 was awful. Gas doubled from $2 to $4. People’s gas bills went for $200 a month to $400 a month it was awful.

Yet when housing prices also doubled and a $1500 mortgage went to $3000 for the same house, everyone cheered.

The housing bubble caused the overspending. The housing crash caused the recession. The fact Obama won’t let the crash correct on its own is why the recession has not ended.

angryed on April 19, 2010 at 10:09 AM

File this under Never Ever Question Ed Over His Numbers. If you do, he will cluster bomb you with facts and graphs.

Great job, Cap’n!

TXUS on April 19, 2010 at 10:09 AM

So, we’ve consistently been above the “floor” in job losses the entire time, but the unemployment rate has appeared to “stabilize” between 9.7 and 10.0 percent. Pretty sure we’ve established that this is mainly because hundreds of thousands of people have been unemployed for so long, they are no longer counted as job seekers. It’s a disaster scenario lurking under the stats.

I think we need a new way of calculating unemployment.

forest on April 19, 2010 at 10:13 AM

“After publishing the chart, I got several e-mails criticizing me”

How many were from AP?

exceller on April 19, 2010 at 10:14 AM

Still doesn’t take in effect that some people are getting their hours cut instead of being laid off. That has helped initial jobless claims down.

ButterflyDragon on April 19, 2010 at 10:14 AM

You think you will impress liberals with facts? How long have you been at this game?

faraway on April 19, 2010 at 10:17 AM

We have nothing to fear but the fear of government intervention.

jukin on April 19, 2010 at 10:17 AM

Context.

LOL, most likely..nuance.

This administration really does suffer from cranialfeceitis or if you could use a Spanglish, free translation, that would be poopoocabeza.

There heads are filled with it and its running out their mouths.

Speakup on April 19, 2010 at 10:20 AM

Well at least we’re seeing some new faces in your unemployment line photo. That poor woman with the cell phone must have finally gotten a job.

MainelyRight on April 19, 2010 at 10:22 AM

What I find interesting is when there is a HUGE spike in NSA numbers, the SA numbers adjusted down to the point of almost being flat. Now I’m not an ecomimist, and can’t pretend to be one, but that just seems a bit fishy to me. How can you make an adjustment that erases 500k unemployed because of “the season”? I’d love to know what the methodology is for this, but i fear it wouldn’t make much sense anyways.

todler on April 19, 2010 at 10:24 AM

The Chief economist is
Rosie Scenario PhD.

seven on April 19, 2010 at 9:52 AM

In this administration more like Rosie Palm PhD.

Aviator on April 19, 2010 at 10:27 AM

Where is the red head??

PatriotRider on April 19, 2010 at 10:28 AM

Well at least we’re seeing some new faces in your unemployment line photo. That poor woman with the cell phone must have finally gotten a job.

MainelyRight on April 19, 2010 at 10:22 AM

Or she gave up looking for a job and so no longer counts as unemployed.

How can you make an adjustment that erases 500k unemployed because of “the season”? I’d love to know what the methodology is for this, but i fear it wouldn’t make much sense anyways.

todler on April 19, 2010 at 10:24 AM

The graph starting from early 2007 shows a seasonal adjustment downward during the early winter for all three years displayed. To compensate for this, the adjusted numbers are higher than the unadjusted for most of the rest of the year.

DKCZ on April 19, 2010 at 10:32 AM

Where is the red head??

PatriotRider on April 19, 2010 at 10:28 AM

She gave up looking for work, and is now no longer considered to be unemployed by the State.

forest on April 19, 2010 at 10:35 AM

DKCZ on April 19, 2010 at 10:32 AM

Sorry, didn’t catch the same comment about the no longer “unemployed” redhead.

forest on April 19, 2010 at 10:36 AM

Even with data and charts, you will not convince those critics, of what we’ve known as facts (because we have eyes and ears).

Sir Napsalot on April 19, 2010 at 10:37 AM

File this under Never Ever Question Ed Over His Numbers. If you do, he will cluster bomb you with facts and graphs.

Great job, Cap’n!

TXUS on April 19, 2010 at 10:09 AM

Trolls like facts. :’)

Where are they, still sleeping in?

Yoop on April 19, 2010 at 10:47 AM

Thanks for doing this work Ed. I had the same concerns about the original chart. Obama is doing enough things that are hurting the economy that we don’t need to spin it. The truth will prevail.

daddio on April 19, 2010 at 10:48 AM

As an economist I can graph anything i want. The most massive factor that people ignore is the cost of crude. as crude went up, food, transportation went up and car sales dropped. Construction costs went up and there was a trillion less to spend on other consumer products and house payments. When people have no money left on payday and credit cards are maxed, paying more for fuel triggered a persoanl insovency crisis.

seven on April 19, 2010 at 9:42 AM

What you are describing are related events, and Ed doesn’t need to display them to prove his point. Whether such events are related depends on their mathematical correlation, and correlation doesn’t necessarily denote causation. In other words, did crude go up because transportation costs went up, did transportation costs go up because crude went up, or did something completely outside the system drive both up? That’s why the science here is not exact — not only do you need the variable “t” (time) to determine a causation, you need to locate the commodity driving the system. We believe we know what is driving this system — its the social engineering the Democrats did to try to put a loan in everyone’s pocket, regardless of their ability to repay said loan. Analysing the impact of policy at Freddie and Fannie is key to all of this. But if gurus like Bernanke fail miserably at this analysis, what can any of us poor common folk do better?

unclesmrgol on April 19, 2010 at 10:55 AM

Great work Ed.
As for the Redhead, she has either given up, or she is behind the tall dude (6th person from the front).

ZeeMI on April 19, 2010 at 10:57 AM

Second to daddio. Thanks Ed. Good job on the number crunching.

MarkT on April 19, 2010 at 10:59 AM

With the black cloud of mark to market, banks are punished if they take risks.

seven on April 19, 2010 at 9:47 AM

More likely the banks are punished if they tell the truth, since they were allowed to return their Balance Sheets to Mark-to-Make-Believe for RE investments in MBS, both commercial and residential and only then began showing profit based on Comprehensive Earnings.

ExpressoBold on April 19, 2010 at 11:07 AM

Hummm…Do you really still think the facts matter? Get with it man. Reality is what Barry and the lamestreammedia say it is. Happy Daze R Here Again.

roflmao

donabernathy on April 19, 2010 at 11:09 AM

This data and the plot already exists:

http://www.forexfactory.com/calendar.php.

This shows a weekly calendar view of all news announcements that could affect the Forex currency market.

In the upper left corner of the web page is a “monthly” view. You can use it to navigate to last week’s news, among which was the referenced DOL report on claims (I believe it was last Thursday?).

Anyway, click on the 15th (?) or the whole week to get to that web page. Scroll down the page until you see the Unemployment Claims announcement. On the far right of that line is a charting icon. Click on it will pull up the graph showing the claims going back to 2005. The display is a bit tricky to understand: the scale at the bottom has a slider that you can use to show more of the available data since I believe the default is the last 20 or so data points. The data shows the prediction (orange or yellow line) and the actual numbers (blue bars on the graph).

This is a free web page accessible to anyone.

This is also where the “unexpected” stuff comes from. In the case of Unemployment Claims, the DOL provides the expectations based on estimations (I believe) of some group of economists (I’m really nor sure). When the expectations are way off, or opposite, what actually happens, you get the “unexpected.”

For example, this Thursday is another Unemployment Claims report. In spite last weeks surge above expectations, they/re predicting claims going down to 449K. Now click on the graph icon and it pulls up a chart with about 20 bars, showing the data for the past 20 weeks. You’ll quickly notice that the DOL has underestimated initial claims for the last 2 weeks, and the “trend” isn’t looking good. Care to place a bet on what happens this week?

There is another icon that looks like a folder that shows the source of that data.

As a currency/futures trader, I look a this web page every day. I make sure that I’m OUT of the market or trade whenever the red or orange news announcements are coming since the market tends to react wildly. Depending on the announcements and their order, I may not trade at all on some days.

What’s interesting lately is that the markets don’t seem to respond at all to “unexpected” news. I believe this means that traders understand what is going on and aren’t buying the pie-in-the-sky predictions from the DOL, or other government entities.

Sorry for being so long winded, but I just wanted to get the info out there so folks can see for themselves.

karl9000 on April 19, 2010 at 11:11 AM

Many people won’t go there, but one of the main reasons for the explosion of debt and credit which helped the recession come about was….$4 a gallon gasoline.uknowmorethanme on April 19, 2010 at 9:57 AM

Look at the charts for steel and grain over the same period. They make oil look tame.

Vashta.Nerada on April 19, 2010 at 11:32 AM

Nice work, Ed. UM’s point is still correct, and you did the labor to demonstrate that. Thanks also to karl9000 for the link.

This kind of stuff is what this medium is all about.

J.E. Dyer on April 19, 2010 at 11:32 AM

right on, ed.
excellent investigative reporting.

this supports my theory that whenever O and his legend
speak up it’s to cloud the truth.

jimmer on April 19, 2010 at 11:40 AM

What do I make from this chart. Thanks for the link karl9000.

When people figured out Obama would be elected they started to fire their employees when he was they really started to fire. Firing peaked in March 09 three months after he took office enough time for Business to put into place permanent reduction plans.

Obama owns this. He and he alone.

His coming ushered in a huge recession what will most likely come to be called a depression.

Steveangell on April 19, 2010 at 11:51 AM

So the seasonally adjusted initial unemployment claims started dropping in April ’09, and flattened out since October ’09.

Since unemployment is a lagging indicator, could we call this the Bush recovery followed by the Obama stagnation?

Then there’s the dirty little secret that the Bush tax cuts expire next year–a nasty tax hike that Congress doesn’t even have to vote for, which will stop any recovery dead in its tracks–unless Republicans take over the House and extend the Bush tax cuts.

Maybe some Republicans should be making some noise about this…

Steve Z on April 19, 2010 at 12:14 PM

His coming ushered in a huge recession what will most likely come to be called a depression.

Steveangell on April 19, 2010 at 11:51 AM

Markets don’t operate in a vacuum. While the financial fall was inevitable due to over-leveraging and other factors, and while Obama did have the “misfortune” (he DID campaign for the job) of getting elected at just this time, you don’t send negative pricing signals to a volatile market and not expect individuals to respond in their own best interest.

It’s no different than telling a wounded man that you’re going to kick him if he tries to get up. The solution is don’t get up. Unfortunately, the kick is now going to come while the he’s on the ground. It’s going to get a lot worse when that starts.

karl9000 on April 19, 2010 at 12:37 PM

It would be nice to see that chart with government jobs excluded.

free on April 19, 2010 at 12:47 PM

It would be nice to see that chart with government jobs excluded.

free on April 19, 2010 at 12:47 PM

Masochist, eh?

karl9000 on April 19, 2010 at 12:54 PM

Yes.

It looks very much like a long Depression to me.

Very unlikely Democrats will allow tax cuts to be extended even if the GOP takes over both houses Obama will veto. If not we will get VAT and Cap and Trade.

I pray the Senate will stop all confirmations until after the people speak in November. I will actively work for the defeat of any who vote in Nominations until them. They will have clearly spoken against the will of the people. The Democrats did this it is time for us to do it.

Steveangell on April 19, 2010 at 1:02 PM

and while Obama did have the “misfortune”

LOL

you don’t send negative pricing signals to a volatile market and not expect individuals to respond in their own best interest

Seems to me Obama being elected was the biggest negative pricing signal sent to the Market.

It’s no different than telling a wounded man that you’re going to kick him if he tries to get up. The solution is don’t get up.

Exactly the position any business thinking of expanding is in with this President. Much higher Regulation and Health Insurance cost already. Looking forward huge increases in energy cost taxes and employee cost overall. Not at all the thing companies want to endure. A huge reason to sit and wait for a positive outlook which will never come with this President. Never come until his legislation is undone in fact.

Steveangell on April 19, 2010 at 1:11 PM

what can any of us poor common folk do better?

unclesmrgol on April 19, 2010 at 10:55 AM

I would like to add here that even though this is a wonderful attempt at trying to make sense of all this chaos, since there are so many variables involved, we will truly never know the whole story of how, why, & how much.
But if we use a little common sense, then we don’t need to produced wonderfully analyzed charts & graphs.
Bcs I happen to know that when the govt messes w/ stuff, they ruin it.
And since the free markets are not based upon total reality & are meshed with the reactions & feelings of people as well as supply & demand, you can never play it safe in anything that you do.
Which is why the govt trying to make things ‘safe’ is rediculous.

Badger40 on April 19, 2010 at 1:28 PM

FYI:

NEW YORK (AP) — A gauge of future economic activity jumped 1.4 percent in March, the fastest pace of growth in 10 months.

The rise in the Conference Board’s index of leading economic indictors suggests economic growth is likely to continue for the next three to six months.

Economists polled by Thomson Reuters had expected the index to grow 0.9 percent last month.

The report says the leading indicators’ growth was 0.4 percent in February and 0.6 percent in January, up from previous estimates of 0.1 percent and 0.3 percent.

“The indicators point to a slow recovery that should continue over the next few months,” Ken Goldstein, an economist at the Conference Board, said.

The gauge is made up of data on housing, jobs, manufacturing and financial markets, most of which has already been released. Seven of the 10 indicators increased in March, led by a big difference between overnight and 10-year interest rates, known as the interest rate spread, and a pickup in average weekly hours worked in the manufacturing sector.

Jimbo3 on April 19, 2010 at 1:39 PM

Well done post, Ed. Graphs are always helpful at illustrating a situation, even if it is bad news.

Mallard T. Drake on April 19, 2010 at 1:44 PM

karl9000 on April 19, 2010 at 11:11 AM

Very nice. Thanks.

RedWinged Blackbird on April 19, 2010 at 2:11 PM

Jimbo3 on April 19, 2010 at 1:39 PM

Source: The Conference Board Inc. (latest release)

Measures: Change in the level of a composite index based on 10 economic indicators;

Usual Effect: Actual > Forecast = Good for currency;

Frequency: Released monthly, about 20 days after the month ends;

Next Release: May 20, 2010

FF Notes: This index is designed to predict the direction of the economy, but it tends to have a muted impact because most of the indicators used in the calculation are released previously [emphasis mine];

Derived Via: Combined reading of 10 economic indicators related to employment, production, new orders, consumer confidence, housing, stock market prices, money supply, and interest rate spreads;

Also Called Leading Indicators;

Acro Expand The Conference Board (CB)

Yeah, it’s up. It’s also one of those indicators that has the least effect on the Forex and Futures market. As it says, it’s made up of previously released info so any impact would be negligible.

Is it good news? Well, previous data shows that the CB estiamte was in the negative territory back through 2005 with some ventures into positive. So it should be good news. But looking at those indicators that make up the CB, they’ve been looking sort of grim lately…

In fact, the CB data shows it’s been positive since April 2009. So where are the jobs? Where are the other improvements in the economy?

There’s a reason the CB doesn’t have that much impact on the markets…

karl9000 on April 19, 2010 at 2:12 PM

Ed,

I am not an economist nor do I play one on TV, but I do pay attention to the news and other sources. As one of the posters said they can make any graph say whatever they want it to say, well, it seems that the WH and news media have a lot of conflicting stories to tell and are hoping that the public is not paying attention. Here is an article worth reading.

belad on April 19, 2010 at 2:31 PM

I would assume the redheaded gal finally got a job – probably temporary work. But it seems this young ethnic Chinese woman has taken her place. I wonder how long she’ll be in the line.

chris999 on April 19, 2010 at 4:23 PM

Ed
I saw this item in a post at ZERO Hedge:

Random is as Random Does – My friend, Dennis Gartman, and I used to poke fun at the monthly non-farm payroll numbers. Dennis felt they were so random, he tried not to be in the office when they were announced. As the crisis has evolved and 8.5 million jobs have been lost, media attention to the number has grown expmentially and we can’t quite ignore them so readily. Or can we?

Dennis came across an article in the weekend WSJ that shows how random the payroll numbers really are. Here’s a citation by Dennis:

The ranks of unemployed individuals grew by 134,000 last month From February to 15 million, the Department of Labor’s Bureau of Labor Statistics says. But it is also plausible, the agency says, that the number of unemployed rose by 500,000.

Or, it could have fallen by 200,000.

In act, at a time when high unemployment tops many people’s worries about the economic recovery, the BLS says only that it is 90% confident that the true change in the numbers of unemployed in March was somewhere between a drop of 243,000 and an increase of 511,000. In other words, it isn’t even clear whether the number of unemployed rose or fell last month. The ranges are similarly broad for seven of the past 10 months— and for more than 75% of the time in the past decade

aLoha Tim on April 19, 2010 at 4:23 PM

karl9000 on April 19, 2010 at 11:11 AM

Yeh Karl, dittos man. That’s a wonderful website and will be in the regular rotation. Thanks.

russcote on April 19, 2010 at 9:17 PM