Political  Calculations
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Today, we're not presenting new analysis so much as we're catching up with the multi-year data revision that the BLS incorporated into its latest report on the number of initial unemployment insurance claims filed across the United States each week (HT: Mark Perry).

The BLS' data revisions, which affect data going all the way back to 2007, had no effect upon our identification of the major trends in the number of U.S. layoffs/new jobless claim filings over the affected period.

The table below summarizes each of the periods identified with letters of the alphabet in our updated chart showing each of the major trends over the period from January 2006 through the present:

Timing and Events of Major Shifts in Layoffs of U.S. Employees
Period Starting Date Ending Date Likely Event(s) Triggering New Trend (Occurs 2 to 3 Weeks Prior to New Trend Taking Effect)
A 7 January 2006 22 April 2006 This period of time marks a short term event in which layoff activity briefly dipped as the U.S. housing bubble reached its peak. Builders kept their employees busy as they raced to "beat the clock" to capitalize on high housing demand and prices.
B 29 April 2006 17 November 2007 The calm before the storm. U.S. layoff activity is remarkably stable as solid economic growth is recorded during this period, even though the housing and credit bubbles have begun their deflation phase.
C 24 November 2007 26 July 2008 Federal Reserve acts to slash interest rates for the first time in 4 1/2 years as it begins to respond to the growing housing and credit crisis, which coincides with a spike in the TED spread. Negative change in future outlook for economy leads U.S. businesses to begin increasing the rate of layoffs on a small scale, as the beginning of a recession looms in the month ahead.
D 2 August 2008 21 March 2009 Oil prices spike toward inflation-adjusted all-time highs (over $140 per barrel in 2008 U.S. dollars.) Negative change in future outlook for economy leads businesses to sharply accelerate the rate of employee layoffs.
E 28 March 2009 7 November 2009 Stock market bottoms as future outlook for U.S. economy improves, as rate at which the U.S. economic situation is worsening stops increasing and begins to decelerate instead. U.S. businesses react to the positive change in their outlook by significantly slowing the pace of their layoffs, as the Chinese government announced how it would spend its massive economic stimulus effort, which stood to directly benefit U.S.-based exporters of capital goods and raw materials. By contrast, the U.S. stimulus effort that passed into law over a week earlier had no impact upon U.S. business employee retention decisions, as the measure was perceived to be excessively wasteful in generating new and sustainable economic activity.
F 14 November 2009 11 September 2010 Introduction of HR 3962 (Affordable Health Care for America Act) derails improving picture for employees of U.S. businesses, as the measure (and corresponding legislation introduced in the U.S. Senate) is likely to increase the costs to businesses of retaining employees in the future. Employers react to the negative change in their business outlook by slowing the rate of improvement in layoff activity.
G 18 September 2010 2 April 2011 Possible multiple causes. Political polling indicates Republican party could reasonably win both the U.S. House and Senate, preventing the Democratic party from being able to continue cramming unpopular and economically destructive legislation into law, bringing relief to distressed U.S. businesses. Fed Chairman Ben Bernanke announces Federal Reserve will act if economy worsens, potentially restoring some employer confidence. The White House announces there will be no big new stimulus plan, eliminating the possibility that more wasteful economic activity directed by the federal government would continue to crowd out the economic activity of U.S. businesses.
H 9 April 2011 26 November 2011 Rising oil and gasoline prices exceed the critical $3.50-$3.60 per gallon range (in 2011 U.S. dollars), forcing numerous small businesses to act to reduce staff to offset rising costs in order to prevent losses. The trend ends when average motor gasoline prices in the U.S. fall back below the $3.50 level in the week between 5 November 2011 and 12 November 2011 - the corresponding improvement in business outlook shows up in the data with the next full pay cycle (2-3 weeks later, or rather, the week ending 26 November 2011!)
I 3 December 2011 Present With average gasoline prices in the U.S. having fallen below the critical $3.50 per gallon level, employers respond to the improving business outlook by reducing the number weekly layoffs at a faster rate, as both businesses and consumers benefit from lower transportation and fuel costs, while consumers gain more disposable income.

This post isn't entire new analysis free however, as we'll break into the residual distribution of the data and take a closer look at the major trends over the past year in our second chart:

We anticipate that the latest figure of 359,000 for the number of seasonally-adjusted initial unemployment insurance claim filings announced by the BLS on 29 March 2012 will be revised upward this week, per the BLS' usual statistically inexplicable practices.

That likely upward adjustment would signal that there has been no sustained improvement in the number of seasonally-adjusted new jobless claims filed each week since the national average of gasoline prices in the U.S. rose above $3.50 per gallon in the weeks following the 11 February 2012 report.

That doesn't necessarily mean that the newest trend of improvement in this economic measure has broken down, but it does suggest that there is at least a micro-trend in the data that bears watching. As for whether the current trend is breaking down, it is unlikely that we will know one way or another for perhaps as long as until sometime during the summer.

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Political Calculations

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