Skip to Content
Investing Specialists

Unemployment Claims: Glass Half Empty or Half Full?

Early-'80s comparisons get you only so far.

As the initial unemployment claims data roll in week after week, there have been many breathless and dire comparisons to 1981 numbers. It's not without reason--the four-week moving average of jobless claims (see below) paints a scary picture. Just part way through the current recession, which began in December 2007, initial claims statistics in the recent era are worse than all recessions except the back-to-back recessions of the early 1980s.

However, an analysis like this misses the fact that the economy and the number of people employed have grown dramatically over the last 40 years, rendering the raw number of claims virtually worthless.

Instead, we think it is more appropriate to look at initial claims as a percentage of workers covered by unemployment insurance. In other words we are dividing the four-week moving average of initial unemployment claims by the number of people covered by unemployment insurance. Using that data, the graph below shows a worsening employment situation but one that is not at epic proportions.