Some Good Economic News

Dec 29, 2011 by

Using labor market information (LMI) on a regular basis has taught me patience, lots and lots of patience. The reason being that LMI data tends to be mostly trailing data.

For instance; information about employees is derived from what is called ES 202 data. This data is collected from employers when they file unemployment information. The federal government then compiles the information and makes it available. It takes about 6 months until the data is available, that is a long time to wait to see who is working in our area today..

Of course you are familiar with the most common data point of LMI data that we use, that is the monthly unemployment information. This information is available about 2 weeks after it is gathered. That seems pretty reasonable, but, and it is a pretty big but, unemployment data is gathered from a monthly survey, not from an actual accounting of employment.

The survey is called the Current Population Survey. It is conducted by the Census Bureau and surveys about 60,000 individuals nationwide  and has been ongoing since 1940. Interestingly it was started as a WPA program to help alleviate the high unemployment caused by the Great Depression: you know, back when government felt obliged to act in national emergencies.

In addition to the monthly CPS performed by the Bureau of Labor Statistics the census bureau conducts an ongoing annual survey called the American Community Survey. The ACS updates employment information as well as other demographics. It has replaced the mid decennial data gathering that the census bureau used to perform.

So the question you may be asking is “what current information is available regarding unemployment”.  Well on a weekly basis the actual number of individuals who file new unemployment forms is counted. The data is reported on Thursday of the following week. So every Thursday we have a snapshot of what is going on with employment in the nation.

This figure, which is referred to as the Initial Claims data, gives us a pretty good indication of what is going on in the economy. If a lot of people are being “downsized”, I love the new euphemisms, it is an accurate indicator that the general economy is not doing too well.

The data is very useful when put into time series perspective. It provides great trend analysis when you look at it on a regular basis.

For instance last week’s report of Initial Claims was that 366,000 new claims were filed. That is the lowest figure in a couple of years. For most of 2009 and 2010 the  initial claims report showed around 415,000 – 435,000 new claims. Recently the figure has been hovering around 405,000-410,000. So analysis of the new claims report makes it clear that the economy is improving, demonstrating the slow and steady improvement that we have been expecting since the great recession took hold in 2008.

If you want to follow the Initial Claims report you can find it on the WB’s web site, We also feature it in our weekly news update which you can sign up for at our website.

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