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Posts tagged with: "LNU00000060"

View this series on FRED

What can we claim about initial claims?

Keeping track of initial unemployment insurance claims

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.

View on FRED, series used in this post: IC4WSA, LNU00000060

The demographics of the labor force participation rate

There is much lamenting about the decline in the labor force participation rate. As we recently discussed on this blog, while the rate decreased quickly during the previous recession and its recovery, the overall decline began several years before. This decline indicates there must be more than cyclical or even policy-related forces at work. One likely candidate is demographics. In the graph above, the proportion of the U.S. population 25 to 54 years of age follows a pattern similar to that of the labor force participation rate over the past 10 years. Why look at this 25-54 age range? Because this group has the highest labor force participation rate. So, if the share of this age group is declining, the aggregate labor force participation rate is likely to decline as well.

How this graph was created: For the first line, search for “population 25-54” and select “Civilian noninstitutional population—25-54 years.” To create the ratio, add the “Civilian noninstitutional population” series via the “Add Data Series” option: When you add this series, be sure to select “Modify existing series” for series 1. Then use the “Create your own data transformation” option using the formula a/b*100 so that the result is expressed in percentages. For the second line, simply add the civilian labor force participation rate as series 2.

Suggested by Christian Zimmermann

View on FRED, series used in this post: CIVPART, CNP16OV, LNU00000060

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