While the monthly or weekly deltas in most incoming data is noise, sometimes the multi-year trend is so significant that it is worth repeating. To wit, as we demonstrated last week the unemployment claims numbers remained flat as a pancake until the very month before the Great Recession incepted in December 2007.
In fact, the 320,000 level in November 2007 was exactly the same as it had been back in May 2006. So if that doesn’t define a lagging indicator, we are hard pressed to understand what might: The worst recession since the 1930s, yet not even a tiny hit that an economic plunge was literally weeks away.
What this chart really says, is that employers hoard core, fulltime employees until demand for output turns down decisively, but that doesn’t mean they are not shedding labor at cyclical turning points.
They actually are, but it’s invisible in the chart below because the ballyhooed unemployment claims indicator does not recognized the shedding of hours, as opposed to full-time head counts. Nor does it pick-up reductions in contract employees or temp agency employment.