Share this Post on Twitter

Thursday, August 25, 2011

Does the Decrease in Continuing Claims Reflect an Improved Employment Situation?

The Street outlines that continuing claims are continuing to trend down:

The total number of Americans filing for unemployment look a bit better than the initial claims data. Continuing claims for the week ended Aug. 13 fell to 3.641 million from 3.721 million, reaching the lowest level since September 2008. Economists were expecting the reading to come in at 3.7 million.
While this is not in itself a bad thing, it requires additional research to determine if it is in fact a good thing. The problem is that individuals are losing coverage as the length of many of those unemployed has extended well past the length they can receive benefits. In addition, the number of newly unemployed is unlikely to grow at the same pace even if the economy remains under pressure, as the overall number of individuals employed is smaller and "low hanging fruit" (apologies to anyone that is unemployed) were already laid off.

To account for some of this issue, the chart below shows the level of continuing claims since 2007 (which shows the peak in continuing claims in 2009), plus the increase in the number of individuals not in the workforce over that time to account for those no longer collecting unemployment.



Source: DOL / BLS