Thursday, August 8, 2013

The unemployment claims rate decline is slowing

As Lee Adler points out, "claims data rings no bell to trigger central banker Pavlovian response" (see post). Today's unemployment claims number - without the unreliable seasonal adjustments - seems to follow the longer-term trend of ongoing declines.

But unlike the unemployment rate number, which has been declining in a linear fashion (see post), the ongoing reduction in claims is gradually slowing. The slowdown is particularly visible in the continuing claims (insured unemployment) number.  Any type of nonlinear fit will result in a substantial curvature (with positive second derivative). Part of the issue of course is that, according to some sources, about a million new workers enter the US labor force each year.  At some point we could therefore see this trend begin to bottom out, as the job creation rate is offset by a growing labor force.
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