Sunday, May 23, 2010

Weekly Unemployment Claims Rise

The number of workers filing unemployment insurance claims rose by 25,000 from 446,000 last week to 471,000 this week. The rise was unexpected. Economists and policy makers were concerned that the recovery may be slowing the creation of jobs. Jobs are part of the dynamic at the heart of the US economy. Slow job growth leads to slow consumer spending, and then slow economic growth which finally leads back to slow job growth.

The chart shows unemployment claims stuck in a flat trend at about 450K since the beginning of the year. Many people believe that UI claims must be below 400K to reduce the unemployment rate.

There was no clear reason for the change. The economy has been adding job's for the past four months. The change may be due to random fluctuation.

Continuing claims dropped by 40,000 to 4.6 million.

This second chart of the longer term trends show the baseline case of about 300K during periods of economic growth and 400K or below during recovery. Our current UI situation is about 450K.

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