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To: GST who wrote (132631)	10/6/2001 2:25:25 PM
From: Oeconomicus	Read Replies (1) \| Respond to of 164687

...are NOT lagging indicators of where employment is going... Well, can any stat really be a lagging indicator of where that stat itself is going? Hmm. Let's see - if unemployment gets over 5% next month, that indicates that in September it was on its way to 5%? ;-) Seriously, it isn't a good indicator of where it's going, just where it's been. Newton's laws notwithstanding. New claims might be a good predictor of the unemployment rate in future periods, but the rate itself is not. IMO. OK, rereading, I think we are saying the same thing. New claims lead. Anyway, that wasn't what I meant about unemployment being a lagging indicator. Sure, becoming unemployed doesn't lag one's reduction in income and spending. However, the unemployment rate, in the past, has generally begun rising AFTER the economy has started declining (that was certainly true this time) and bottomed AFTER the economy bottoms. Businesses are slow to let people go when things first turn down and they are slow to rehire when things turn back up. Makes sense to me. That said, I haven't run the numbers myself, but this is what I've read and heard. BTW, I agree with you that we will see further losses in the stats, primarily as a result of 9/11 (in addition to a likely continuation of pre-9/11 weakness). I don't think I've said otherwise. I've only made a more optimistic prediction as to the magnitude of the job losses. I also think this downturn will not last nearly as long as many here on SI, as well as some in the bear camp of financial writers, like to predict (not you - you are downright pollyannish by comparison to some ;-). I do think, however, that the media has a tendency to overstate or sensationalize any bad economic news. The 1.3 million number is a good example. If someone on CNBC said that was the YTD jobs lost in the economy, then they are flatly wrong. If it is just the number of layoffs YTD, then unless they also noted jobs added in other businesses/sectors to offset most of those layoffs, they are sensationalizing the news. JMO, Bob PS: For the record, initial claims for unemployment is one of the components of the Conference Board's leading indicator, non-farm payrolls is a coincident indicator and duration of unemployment is a lagging one. The unemployment rate itself isn't used in any of the three. conference-board.org