Thursday, May 21, 2009

Continuing Claims Continues Climb

The number of fired less hired (think the increase in continuing claims) continues to grow exponentially. The importance of this on the broader economy was laid out here.

Reuters with the details:

The most severe U.S. recession in decades has already cost over 5 million jobs since it began in late 2007, and despite some recent indications that employment conditions might be stabilizing, the labor market remains in dire shape.

The number of people staying on the benefits roll after drawing an initial week of aid increased by 75,000 to a more-then-forecast 6.662 million in the week ended May 9, the most recent week for which data is available. Analysts estimated so-called continued claims would be 6.65 million.

Source: DOL

Credit Writedowns continues to have a well thought out, but differing point of view.


  1. You missed a great alliterative headline:

    Continuing Claims Continues Climb

  2. Great post about continuing claims. I took your advice and revisited your previous post titled "Net Claims is What Matters" and wholly agree with your thoughts on the topic.

    One thing I thought might be interesting to try to visualize after looking at the charts there is the average amount of time it takes to recover from job losses when measured against the continuing claims number. As I looked at Hired less Fired chart it was pretty easy to see approximately where the recessions started AND the re-employment spike seemed fairly consistent in slope.

    Based on that, two things could be extrapolated. First, if the recession ended today, assuming the re-employment slope was fairly consistent with historical slopes, it would be interesting to see when we would be back into positive territory.

    Second, it would be interesting to see if the fired less hired is a leading or trailing indicator for the economy. Without the historical recessions visualized, it is hard to see.


  3. Thanks for the comment Mike. Historically it has actually been the case that initial were leading and continuing were lagging. In my original post I link to an article from Credit Writedowns that details this clearly.

    My argument is that this time is different. I'll actually have a post later in the day which theorizes that maybe the "this time is different" may be a generational issue as the U.S. economy may no longer be able to support as many private workers in the past, thus this more a secular trend than many currently believe.

  4. I think you are right about "this time is different". Just for the fun of it, I went out and found a quick characterization of all the recessions since the great depression at

    What I pulled from this quickie analysis was that few if any of the other recessions were caused by such deep systemic failures. Most were caused by a dramatic increase in the cost of commodities like oil. The damage these recessions caused seemed to have little multiplicative effects compared to the cascade of effects we are seeing this time, largely in the housing market.

    Another major consideration this time compared to previous recessions is that this time, there was a huge destruction of personal wealth and personal credit worthiness. The bubble caused housing values to crash, causing all industries related to housing to crater. Those affected industries shed employees. Those employees stopped consuming and quit paying their mortgages, destroying their credit ratings and throwing away all perceived equity. I contend that this cycle went round and round more in this recession than in previous ones because the bubble was not just a commodity or an investment, but rather a product with thousands of hours of productivity contributing to its value.

    Now that those who lost their homes have no money and their credit rating is shot, they can't buy that house or new car or really anything else until they get the cash. Without them buying, there is no demand and no need for employers to start hiring again, and when they do, it won't be for the high wages they were paying 18 months ago.

    Later today I think I will read up some on the Japan's lost decade to see if there are some better parallels to what we are seeing today than looking back at our historical recessions.


  5. mike- the link below is too a LONG article, but probably the first thing i read that allowed me to fully grasp what has happened:

    highly recommended