U.S. Labor Market Small But Noteworthy Improvement

Economics / Employment Nov 11, 2011 - 03:37 AM GMT

Best Financial Markets Analysis Article At the town hall meeting in Fort Bliss today, Chairman Bernanke stressed that the Fed is “focused intently” on job creation. He also mentioned that the United States will be affected adversely if there is a blow-up in Europe and added that the Fed stands ready to provide policy accommodation as necessary to minimize the damage.

Speaking about the labor market, initial jobless claims fell 10,000 to 390,000 during the week ended November 5, the lowest reading since April 2011 (see Chart 1).

Continuing claims, which lag initial jobless claims by one week, declined 92,000 to 3.615 million, the fewest number of jobless claims filed since October 2008 (see Chart 2).

These numbers are encouraging, while additional improvement will be necessary to confirm that labor market conditions are improving. The number of applicants under the special emergency and extended benefits program (these numbers lag initial jobless claims by two weeks) moved up slightly to 3.53 million from 3.48 million in the week ended October 15. In sum, there were 7.236 million people obtained unemployment insurance during the week ended October 22 (Continuing claims plus those under special programs).

Earlier in the week, another economic report showed that the number of job openings in September were at the highest level in the past three years (see Chart 3). These numbers suggest small but important positive developments in the labor market.

Asha Bangalore — Senior Vice President and Economist

http://www.northerntrust.com

Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.

Comments

George
11 Nov 11, 20:13

forgetting the U-6 again ??

As an economist, I must comment that you are being neglectful of the "entire" picture of unemployment in the US. You fail to point out that the main reason the unemployment rate has seen sopme small percentage drops is that the government reported number is no longer capturing people who are being dropped from the rolls of benefits - those people who have collected 99 weeks of unemployment but who have failed to find new jobs and are thus dropped from the reporting on a month to month basis. In order to capture the best image of unemployment, look at the U-6 number, which captures all unemployed, those who are employed part time but still seek or require full time work to earn their living plus all "discouraged workers" - people not employed and no longer counted due to expiration of their unemlpoyment benefits. The U-6 has remained stubbornly high, easily over 17% and this is where the real picture of unemployment should be examined by any media source that wants to report on the labor market in the US.

Ignorance of the u-6 allows any analyst to paint a rosier picture than what reality is - which is that many jobs which are now done overseas, simply will not be coming back the US. People who are dropped from the unemployment rolls for expiration and who have not found a job do still need to be counted as unemployed from month to month.

Government reporting is just as soft when it comes to the inflation rate, which excludes "volatile" food and energy prices, when in most cases this is where ALL of the inflation occurs.

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