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Unemployment statistics are a trailing economic indicator. That is, they tend to show reaction to economic direction instead of predicting that the economy will move in a particular direction. That said, there are some unemployment statistics called Mass Layoff Statistics, (MLS), that can help us understand where we might be in this recession compared to the 2001 recession and to non-recessionary times.
We can use relationships inside this data and combine it with information from more forward looking data, (like ECRI WLI), to predict the direction of the economy.
The below chart shows all of the available BLS, MLS data. At first look, mass layoffs appear to be non-instructive with regard to a recession. But if we dig in a bit further we may find ways in which changes in mass layoffs act as an early warning system and give us a sense of where we are in the downturn.
MassLayoffData.jpg
This chart below is a simple graph of the annual count of mass layoffs. It may, or may not, peak this year but we can look at the detail in the data set that follows to get a bit more inside the data to help us determine what next year might look like and which months are more reliable in helping us determine direction.
MassLayoff_Annual.jpg
As you can see from the detail set of data at the top, employers prefer laying people off at the end of the year and in January and July. The data pairs Jan/Feb and July/Aug appear more instructional than other months, (see chart below).
MassLayoff_JanFed_JulAug.jpg
The percentage difference in this chart is the percentage fall in mass layoffs from Jan to Feb and again from July to Aug. You can see that in the 13 years this data has been kept the average change is almost 50% and there has never been a year when layoffs increased in either Feb or Aug from the previous month. But more interesting than the average, is the relative percentage rise of Feb and Aug mass layoffs as we approach a recession.
Looking into the future, the two most interesting MLS numbers will be Feb 2009 and Aug 2009. Should these continue to increase in percentage compared to Jan and July 2009, it will help us understand if the recession will continue for another year.
Link to BLS data
http://www.bls.gov/data/
We can use relationships inside this data and combine it with information from more forward looking data, (like ECRI WLI), to predict the direction of the economy.
The below chart shows all of the available BLS, MLS data. At first look, mass layoffs appear to be non-instructive with regard to a recession. But if we dig in a bit further we may find ways in which changes in mass layoffs act as an early warning system and give us a sense of where we are in the downturn.
MassLayoffData.jpg
This chart below is a simple graph of the annual count of mass layoffs. It may, or may not, peak this year but we can look at the detail in the data set that follows to get a bit more inside the data to help us determine what next year might look like and which months are more reliable in helping us determine direction.
MassLayoff_Annual.jpg
As you can see from the detail set of data at the top, employers prefer laying people off at the end of the year and in January and July. The data pairs Jan/Feb and July/Aug appear more instructional than other months, (see chart below).
MassLayoff_JanFed_JulAug.jpg
The percentage difference in this chart is the percentage fall in mass layoffs from Jan to Feb and again from July to Aug. You can see that in the 13 years this data has been kept the average change is almost 50% and there has never been a year when layoffs increased in either Feb or Aug from the previous month. But more interesting than the average, is the relative percentage rise of Feb and Aug mass layoffs as we approach a recession.
Looking into the future, the two most interesting MLS numbers will be Feb 2009 and Aug 2009. Should these continue to increase in percentage compared to Jan and July 2009, it will help us understand if the recession will continue for another year.
Link to BLS data
http://www.bls.gov/data/