Unemployment Claims May Indicate Emerging Employment Trends

Large decreases in initial claims imply impending employment strength and economic growth for Idaho.

Workers who lose their jobs and are covered by the unemployment insurance program usually file an initial unemployment claim, serving notice that they are beginning a period of unemployment. In 2008 only 36 percent of the total unemployed received unemployment insurance benefits nationwide, but information from those initial claims can indicate labor market conditions and provide insight into the direction of the economy.

Large increases in claims draw attention because they suggest looming employment weakness, which could spread throughout the economy. In the depths of the recession, the number of initial claims in Idaho hit a record 28,314 in December 2008. Employment levels were plummeting and the number of workers filing continuing benefit claims each week was climbing.

Typically the summer months produce higher employment— and fewer claims, but that was beginning to show signs of weakness in 2008. Tourism and retail sales slowed, followed by lower levels of employment in those sectors. New claims continued to rise through 2009, hitting 191,000 for the year.

On an annual basis, initial claims increased 74 percent from 96,661 in 2007 to 146,550 in 2008, indicating weakening employment that persisted through 2009 when initial claims peaked at over 190,000. As the economy started to mend and employment rose, initial claims decreased 12 percent the following year. Although there was little employment growth throughout 2011, new claims were off another 13.5 percent in 2011 and have been on the decline since — dropping from nearly 145,000 in 2011 to just 101,000 in 2013 — the lowest level since the recession began.

Then the economy’s seasonality started showing signs of returning to normal as the number of new claims began falling through 2010 and 2011. The economy was moving toward the road to recovery.