The unemployment rate spikes to 7.2%

The U.S. Department of Labor released the Weekly Claims data for Unemployment Insurance yesterday. Initial claims were at 467,000 for the week ending January 3rd. This is down from the previous week's number of 491,000. The four week average of initial claims, which is not as volatile, was at 525,000. This is down from the recent total of 558,000 reached a couple of weeks ago. 

Continued claims for unemployment insurance increased to 4,611,000 for the week ending December 27th up from the previous week's number of 4,510,000. The four week average for continued claims was also up to 4,470,000 from 4,425,000. This is the highest it has been since December 1982.

Initial claims is faster to move up and signals increases in the unemployment rate. Continued claims take longer to go down than the initial claims once the unemployment rate is elevated. The Unemployment rate doesn't drop until continued claims start to come down.

Unemployment is on the rise. According to "The Employment Situation" for December 2008, released today by the U.S. Department of Labor, the unemployment rate was at 7.2% in December compared to an upwardly revised rate of 6.8% in November. Since 1948, the unemployment rate has never risen by more than .5% in a 12 month span without entering into a recession. The unemployment rate is now up 2.4% in the last twelve months and is up 2.8% from its recent low of 4.4%.

Nonfarm payrolls decreased by 524,000 in December, 584,000 in November, 423,000 in October, and by 403,000 in September.  Last month they revised downward the amount of jobs lost in the previous two months by 199,000. This month, they made a downward revision of 154,000. If you add the payrolls lost in December to the revisions for November and October, jobs were worse off by 678,000 more than was previously reported. This is a significant amount of jobs lost. The average recession since World War II has had a loss of 1,917,000 jobs on average. The biggest loss came in 1982 with 2,838,000 jobs lost. Nonfarm payrolls have declined for 12 straight months with a net loss of 2,589,000. It looks like next month, this recession will develop into the biggest recession in terms of jobs lost since the Great Depression.

Sphere: Related Content