In the last comparable recession, which we know wasn’t anywhere near as deep as the Great Recession just endured, U.S. jobless claims peaked at 695,000 in October 1982.
Weekly initial unemployment claims is an extremely reliable leading economic indicator because the figure is not derived from a survey. It’s an actual tally of real people without a job who are queuing up for the dole.
By the end of the following year, about 14 months later, weekly initial unemployment insurance claims had plunged by more than 300,000 to 372,000. They dipped even further to 333,000 in January 1984.
This time around, claims peaked at a slightly lower 651,000 at the end of March 2009. But over roughly the same period of time, at the end of May this year they had only fallen by 200,000 to 459,000. As we now know they are moving in the opposite direction again, touching 500,000 in the latest week, a level not seen since last November.
The simple explanation is there’s not enough growth. In the first quarter of 1983, the U.S. economy expanded at a 5.1 percent annualised rate, then by 9.3 percent in Q2, 8.1 percent in Q3 and 8.5 percent in Q4. In the first quarter of 1984, when weekly jobless claims troughed, the economy was still expanding by a roaring 8.0 percent.