Monday, March 21, 2011

Initial Unemployment Claims Looking Better




The above picture shows the 4-week moving average of initial unemployment claims continues to move in a positive direction. Let's take a look at the relationship between initial claims and the unemployment rate:



Notice that in the late 70s and early 80s there was a tight relationship between initial unemployment claims and the unemployment rate. However, this relationship started to become more elongated starting with the recovery of the early 1990s and has continued to this day. This means there is now a looser relationship between these two numbers.