Well while I’ve been away from posting the last few weeks, things are starting to not look good. Two months ago I was concerned that the “recovery” was going to proceed at a normal growth rate and effectively close out those already unemployed from employment. I even have a draft long post about it called “The Invisibles” which I still hope to finish. But recent indicators show the economy may be slowing even further. We may be approaching “stall speed” where policy controls get sloppy and the whole thing crashes, again.
Today, the weekly report on new unemployment claims was still poor. I’ll let Calculated Risk explain:
The DOL reports on weekly unemployment insurance claims:
In the week ending May 28, the advance figure for seasonally adjusted initial claims was 422,000, a decrease of 6,000 from the previous week’s revised figure of 428,000. The 4-week moving average was 425,500, a decrease of 14,000 from the previous week’s revised average of 439,500.
The following graph shows the 4-week moving average of weekly claims for the last 40 years.
The dashed line on the graph is the current 4-week average. The four-week average of weeklyunemployment claims decreased this week to 425,500.
This is the eight straight week with initial claims above 400,000, and the 4-week average is at about the same the level as in January when there were fewer payroll jobs being added.
This is a notoriously “noisy” data series, meaning it’s highly volatile and jumps around a lot. But after 8 straight weeks at the elevated 400,000+ level, we can conclude it’s not just noise. There’s a signal here. Layoffs are resuming.
Yesterday’s ADP private payrolls estimate was also very weak. Again Calculated Risk:
Employment in the nonfarm private business sector rose 38,000 from April to May on a seasonally adjusted basis, according to the latest ADP National Employment Report® released today. The estimated change of employment from March 2011 to April 2011 was revised down slightly to 177,000 from the previously reported increase of 179,000.
May’s ADP Report estimates employment in the service-providing sector rose by 48,000, marking 17 consecutive months of employment gains while employment in the goods-producing sector fell 10,000 following six months of increases.Manufacturing employment fell 9,000 in May following seven consecutive monthly gains.
Note: ADP is private nonfarm employment only (no government jobs).
This was well below the consensus forecast of an increase of 178,000 private sector jobs in May.