How do high gasoline prices affect the pace of job layoffs in the United States?
We now have the ability to answer this question thanks to a recent break in the trend for seasonally-adjusted initial unemployment insurance claim filed each week in the United States.
Here, we note that the data for these new jobless benefit claim filings reflect major changes have occurred in the business outlook for U.S. employers making employee retention decisions. This delay corresponds to the typical weekly or biweekly pay periods that most U.S. employers have, where employers allow their current pay period to run out, with any changes they might make with respect to their staffing levels being implemented at the beginning of their next pay period.
For the most recently broken trend in U.S. layoff activity, we observed that average fuel prices in the U.S. rose above $3.50 per gallon in the week between 19 March 2011 and 26 March 2011, which showed up in the data for new jobless benefits being filed in the week ending 9 April 2011, which marked the beginning of the trend. The effect on U.S. layoffs was to derail the pace of post-recession economic recovery in the United States, sending it on a much slower pace of improvement from that point forward.
That continued until the week between 5 November 2011 and 12 November 2011, when the average price of motor gasoline in the United States fell back below the $3.50 per gallon mark. As we saw before, the drop in gasoline prices below this level corresponds to a sudden improvement in the pace of layoff activity in the United States, which began improving more rapidly just 2-3 weeks later, after 26 November 2011.
Political Calculations is a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics.
Be the first to read Political Calculation's column. Sign up today and receive Townhall.com delivered each morning to your inbox.
(An important interview) Saving the Net from the surveillance state (And Crony Media): Glenn Greenwald speaks up (Q&A) | Nick Sorrentino