An economic letter from the Federal Reserve Bank of San Francisco argues that reductions in the national unemployment rate depend in part on changes in the labor force participation rate.
As the graph below shows, higher participation rates require the economy to generate more jobs to maintain and/or reduce the unemployment rate. To bring the rate to 8 percent by June 2012, for instance, the economy will need to generate between 208,000 and 294,000 jobs per month.
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For the benefit week ending on September 4th, 11,800 North Carolinians filed initial claims for state unemployment insurance benefits, and 120,085 individuals applied for state-funded continuing benefits. Compared to the prior week, there were fewer initial and continuing claims. These figures come from new data released by the U.S. Department of Labor.
Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 11,982 initial claims were filed over the previous four weeks, along with an average of 124,362 continuing claims. Compared to the previous four-week period, there were fewer initial and continuing claims.
One year ago, the four-week average for initial claims stood at 17,214 and the four-week average of continuing claims equaled 191,855.
While the number of claims has dropped over the past year, so has covered employment. Last week, covered employment totaled 3.8 million, down from 4 million a year ago.
The graph (right) shows the changes in unemployment insurance claims (as a share of covered employment) in North Carolina since the recession’s start in December 2007.
Both new and continuing claims appear to have peaked for this business cycle, and the four-week averages of new and continuing claims have fallen considerably. Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it difficult to find new positions.
Also, little change has occurred within recent months. Since April 2010, the four-week average of initial claims consistently has ranged between 13,987 and 11,800.
A policy brief from the N.C. Budget & Tax Center finds that North Carolina is facing an estimated $3.3 billion budget shortfall in its General Fund for fiscal year 2011-12.
As the graph below shows, attempts to close that gap solely through budget cuts would drive state spending as a share of total personal income to the lowest level recorded since 1972.
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