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Job JOLTS: How long does it take to hire someone?

The JOLTS release in FRED (Job Openings and Labor Turnover Survey) offers a wealth of information about the U.S. labor market, including transitions in and out of employment. The data on job openings are actually very difficult to obtain because employers don’t necessarily advertise or register job openings, so the JOLTS release is especially useful. In the graph above, we use the data to compute a particular ratio, dividing job openings by hires. Usually it’s not recommended to compare “stocks” (job openings) and “flows” (hires). In this case, however, it has a meaning: A ratio of 1 means that it takes 1 month for a job opening to be filled; a higher ratio means it takes longer. It seems this ratio has never been above 1 except for now, which could be a sign that employers are finding it more difficult than any time since 2001 to hire people.

How this graph was created: Search for “job openings” and select the total non-farm series. Then select the edit graph feature: Use the “Edit line 1” tab to add a series by searching for “hires.” Finally, apply the formula a/b.

Suggested by Christian Zimmermann

View on FRED, series used in this post: JTSHIL, JTSJOL

TED on FRED

There are many TEDs, but the TED in FRED is a spread. That is, the spread between the 3-month LIBOR and the 3-month Treasury bill.

A little background: LIBOR is the rate banks would charge each other for lending, which can be used to measure economy-wide credit risk. Treasuries are basically the safest assets on the market. So, a large TED spread would indicate a lot of credit risk in the U.S. economy.*

But how large is a typical TED spread? At the time of this writing, it looks like it’s about 30 to 40 basis points (0.3 to 0.4%), which is mid-range for recent years. It was up to 57 basis points in 2012 and below 20 on several occasions. A longer historical perspective shows that in times of crisis the TED spread really rises. Use the slider below the graph to change your sample period: The October 1987 stock market crash raised TED spreads close to 300 basis points, and the financial crisis of 2008 raised them to 450 basis points. Considering the whole sample, current conditions actually look pretty good.

*A side note: The TED spread is always going to be positive unless the risk on Treasuries increases much more than what current credit conditions warrant. This scenario could be caused by an increased risk of (partial) default by the U.S. government while credit conditions for U.S. banks remain unchanged. That’s unlikely to happen.

How this graph was created: Search for “TED spread” and you have your graph.

Suggested by Christian Zimmermann

View on FRED, series used in this post: TEDRATE


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