The U.S. Department of Labor released the Weekly Claims data for Unemployment Insurance today. Initial claims were at 346,000 for the week ending July 5th. The four week average of initial claims, which is not as volatile, was at 380,500 down from the previous week's mark of 390,500. This is the highest the initial claims has been since Hurricane Rita in 2005 and the end of the 2003 when the economy started to recover from the 2001 recession.
Continued claims for unemployment insurance increased to 3,202,00o for the week ending July 5th up from the previous week's number of 3,111,000. The four week average for continued claims was also up to 3,145,000 from 3,109,250. This is the highest it has been since 2003.
Unemployment claims reflect the rise in the unemployment rate. According to "The Employment Situation" for June 2008 released by the U.S. Department of Labor, the unemployment rate was 5.5% in June unchanged from May. Since 1948, the unemployment rate has never risen by more than .5% without entering into a recession. The unemployment rate is now up 0.9% in the last twelve months.
Nonfarm payrolls decreased by 62,000 in June and decreased by the same in May. Nonfarm payrolls have declined for 6 straight months shedding 438,000 jobs. Over the last ten years, nonfarm payrolls have increased by an average of 107,000 jobs. Nonfarm payrolls rarely decrease outside of recession periods and it is even more rare for consecutive declines. Excluding periods right before, during and after recessions, nonfarm payrolls have declined consecutively only two times: 3 consecutive times in 1951 and 2 consecutive times in 1952.
It now looks like a recession is unavoidable. The good news is that employment has held up fairly strong so far. The bad news is that employment will probably continue to slide.
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