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Leading Indicators of Unemployment Declines

Posted by LMI Win-Win Network - On October 17, 2013 (EST)

Leading Indicators of Lower Unemployment

Researchers at the Federal Reserve Bank of San Francisco have attempted to identify which indicators best predict improvement in the unemployment rate. They highlight 6 of 30 potential measures that better forecast unemployment six months into the future than does the past unemployment rate itself.

The six indicators include both government and private sector data. The two best predictors are those from the U.S. Employment and Training Administration’s unemployment insurance (UI) system: the insured unemployment rate and the initial UI claims rate. It should be noted that the three worst (of the six) predictors have little better predictive correlations than the previous unemployment rate itself. [p. 2]

The analysts also conclude that the 2013 modest recovery level has picked up more momentum than existed a year earlier, and might accelerate in the future, based on past patterns. [p. 4]

See Gauging the Momentum of the Labor Recovery.

The authors examine data from 1978 through mid-2013, but only for economic recovery periods, as the indicators relevant for predicting falling unemployment are not always good barometers of rising joblessness. The two UI indicators might have been analyzed back to 1971, which would have significantly boosted the sample of economic recovery periods from four or five (some analysts combine the early 1980s recessions into a single recession, given the minimal recovery period between them) by two more.

For national and state UI data, see Unemployment Insurance Weekly Claims Data (the earliest national figures date from 1967, while state data begin in 1987).

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Modified On : October 18, 2013
Type : Thread
Viewed : 1051
In Relation : Unemployment and Joblessness

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