Tough News from the Labor Market

Thu, 14 Aug 2008 14:00:12 +0000

This morning brought two pieces of news from the BLS. First, real earnings declined last month:

Real average weekly earnings fell by 0.8 percent from June to July after seasonal adjustment, according to preliminary data released today by the Bureau of Labor Statistics of the U.S. Department of Labor. A 0.3 percent increase in average hourly earnings was more than offset by a 0.3 percent decrease in average weekly hours and a 0.9 percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Second, initial claims for unemployment insurance continue to be high:

In the week ending Aug. 9, the advance figure for seasonally adjusted initial claims was 450,000, a decrease of 10,000 from the previous week's revised figure of 460,000. The 4-week moving average was 440,500, an increase of 19,500 from the previous week's revised average of 421,000.

Here is a graph of that 4-week moving average over the last 30 years (click on it to see a larger version):

Comparing the current episode to the last 20 years, which includes the recessions in the early 1990s and early 2000s, the level of claims was higher during those downturns than it is currently. But the level never got as high as it is now without going even higher.