Economic Update:  Employment Numbers on the County Level

07.16.2010

Floyd Clark Employment

The most recent employment data at the county level show a deceleration in employment losses for Floyd and Clark counties.  Quarter 4 2009 data indicate that year over year changes in quarterly employment slowed considerably from the 3rd quarter.    We will likely see a further deceleration of losses when the data are released for the 1st quarter of 2010.

Unemployment Claims

National claims declined by a sizeable amount yesterday.   The 450,000 weekly claims floor has finally been pierced.  Despite some gains in employment, national claims would not previously fall below the 450,000 level.  Yesterday’s report had new claims falling to 429,000.   The less volatile 4-week average had claims falling to 455,000, not quite under the 450,000.    The downside in the report involved increasing continuing claims.   I think this is indicative of the long-term unemployment we have seen with this recession.  So despite an improvement in new claims, continuing claims continue to increase, placing additional headwinds to the consumer.   This will continue to challenge consumer confidence.

Source:   www.barrons.com

New and continuing claims for 2010 in Floyd and Clark Counties continue their downward trend.     Claims had actually increased during the first quarter of 2010, but reversed since.   As local claims continue to decline, we should also see similar declines or stability in the county unemployment rates.   Unemployment in both counties now stands at 8.3% in May, down slightly from 8.4% in April.  My original outlook in November 2009 indicated that we would likely see rates not go below the 8% level with some counties observing rates just under 8%.  The latest county unemployment claims data point to a positive near term outlook for local unemployment rates.

Consumer Sentiment

Consumer sentiment plummeted during July.  In a reading out this morning, consumer sentiment declined to an index of 66.5, but the consensus forecast was a much higher 75.    Given that the habits of the consumer will dictate the strength of the recovery, the Dow is now down over 170 points during the morning session.  Consumer confidence remains on shaky ground due to ongoing challenges in housing, labor market fragility, and continued volatility in the financial markets.    This latest reading on consumer confidence is now in neighborhood levels that existed in mid 2009.  Moving forward, consumer sentiment is going to be a closely watched number.

Source:   www.barrons.com

Consumer Prices

The latest report out on consumer prices shows a very weak pricing environment.     This gives the Fed more room to keep the targeted Fed Funds rate unchanged.  Low prices will certainly make cost control paramount and will place greater emphasis on productivity.  Due to low prices, we can expect wages to remain fairly stagnant.   Lower prices and subsequent stagnant wages will exacerbate household debt levels, another problem for consumer confidence.

Year Over Year Changes in CPI

Source:  www.barrons.com

Suggestions

If you have any suggestions on future columns or research about specific industries or other economic data, please send me an email at udufrene@ius.edu.

###

Uric Dufrene.

Uric Dufrene, Ph.D. holds the Sanders Chair in Business in theSchool of Business at Indiana University Southeast. He conducts research on local and regional economic trends, and teaches corporate finance at the undergraduate and graduate levels. He previously served as dean of the School of Business.