New Claims for Unemployment Insurance in today at 627,000, pulling the four week moving average up to 617,250.
We can’t seem to break-out into a clear recovery pattern. Each week I am expecting a little bit better number that rolls in. In a traditional recession what we see is a sharp turnaround in new claims once the recovery has begun. The economy has natural job creating mechanisms and so to sustain a recession those have to be overwhelmed by newly unemployed workers.
What we can say is that there appears to stabilization. This is similar to the last two recessions that we had.
No clear drop off but stabilization. My working theory is that this change represents the dominance of service jobs for which layoffs are a much more permanent affair. In a factory setting workers may simply be sent home for a few weeks while the plant works off inventory and then recalled. As soon as the overall inventory glut in the economy is worked off factories will stop these plant shutdowns and the new claims will collapse.
For a service economy a new claim represents a worker who really was let go. That decision didn’t come ways for management and was a long time in the making. It will take a while before we work through all of the layoffs that were planned back in January and February.