Going by the current state of the trend we've observed since 21 November 2009 through 23 October 2010, it will take another 645 weeks before first-time unemployment insurance claim filings fall back to the average level of 317,000 they held throughout the mid-2000s.
For those of you playing along at home, 645 weeks works out to be about 12.4 years.
We've updated our chart tracking these first-time jobless benefit claim filings, which we've annotated with events that coincide with significant swings in the data. Or potentially significant, as is the case for the most recent improvement we've seen in this data, which came last week.
As always, we assume there is a two to three week lag between when an event that can affect the employee retention decisions of businesses with when the effect of that change in outlook shows up in unemployment insurance claim filings. This corresponds to the typical pay periods for most U.S. workers, where we assume that any changes take place with the beginning of the next pay cycle for the businesses laying off workers.
The table below identifies the events corresponding to the major shifts in the trend for first time unemployment claims since 17 June 2006:
| Timing and Events of Major Shifts in Layoffs of U.S. Employees | ||
|---|---|---|
| Date of Confirmed Break from Previous Trend | Period in Which New Trend Takes Effect | Likely Event Triggering New Employment Trend (Occurs 2 to 3 Weeks Prior to New Trend Taking Effect) |
| 24 Nov 2007 | 6 Oct 2007 - 13 Oct 2007 | Federal Reserve acts to slash interest rates for the first time in 4 1/2 years as it begins to respond to the growing housing and credit crisis, which coincides with a spike in the TED spread. Negative change in future outlook for economy leads U.S. businesses to begin increasing the rate of layoffs on a small scale. |
| 26 Jul 2008 | 21 Jun 2008 - 28 Jun 2008 | Oil prices spike toward inflation-adjusted all-time highs (over $140 per barrel in 2008 U.S. dollars.) Negative change in future outlook for economy leads businesses to sharply accelerate the rate of employee layoffs. |
| 2 May 2009 | 21 Mar 2009 - 28 Mar 2009 | Stock market bottoms as future outlook for U.S. economy improves, as rate at which the U.S. economic situation is worsening stops increasing and begins to decelerate instead. U.S. businesses react to the positive change in their outlook by significantly slowing the pace of their layoffs. |
| 10 Apr 2010 | 14 Nov 2009 - 21 Nov 2009 | Introduction of HR 3962 (Affordable Health Care for America Act) derails improving picture for employees of U.S. businesses, as the measure (and corresponding legislation introduced in the U.S. Senate) is likely to increase the costs to businesses of retaining employees in the future. Employers react to the negative change in their business outlook by slowing the rate of improvement in layoff activity. |
For the week of 30 October 2010, we would anticipate that these claims will fall in a range between 411,000 and 508,000. Assuming the current trend remains in effect, we should see the overall level of jobless claims fall at a very sluggish rate of 220 per week.