Initial unemployment claims is a much-watched indicator of the economy. It counts how many people have become eligible for unemployment insurance compensation in a particular week. The data are available quickly and at a high frequency (weekly), but the series has the disadvantage of being highly volatile. This is why FRED also offers a four-week moving average, shown in the graph above: Simply, it’s the average of the past four weeks. Included in the graph is also a red line that indicates the lowest value of this statistic in the course of its history—in May 1969. Currently, claims are around 230,000 per week; and, while this is low, it was lower for 126 weeks early in the sample period.
Of course, the population was much smaller in the 1960s, so the current statistics are even more impressive than they first appeared. Which is what the second graph shows, after dividing new claims by population. The red line indicates the lowest point before recent years, which occurred in April 2000. That low point has clearly been beaten—ever since May 2015, in fact. Keep in mind, though, this statistic is only part of the labor market picture. For example, average unemployment duration is still elevated (see a previous blog post on this). Also, unemployment insurance eligibility requirements may vary over time and, thus, distort the statistic.
How these graphs were created: Search for and select the 4-week moving average for “initial claims” and click “Add to Graph.” From the “Edit Graph” panel, use the “Add Line” feature to create a “user-defined line” and enter 179,000 for the start and end values. For the second graph, edit the first graph by adding a series to the first line, searching for “civilian population” and applying the formula a/(b*1000). Use the “Add Line” feature to create a “user-defined line,” and enter 0.00223 for the start and end values.
Suggested by George Fortier.