WV Economic Expansion? Not Until New Monthly Jobless Claims Are Under 6,500
The Department of Labor is showing that monthly jobless claims (a.k.a. Unemployment Insurance Initial Claims) rose to 500,000, a nine-month U.S. high. This is not a good sign for the economic recovery. Most economists maintain that new monthly claims need to be below 400,000 for us to see a substantial uptick in hiring.
So, what does this mean for our state's economic recovery? For West Virginia, this means new monthly jobless claims need to be in the neighborhood of 6,500 for us to be on our way toward full economic recovery. The Chart below illustrates this point by tracking July initial UI claims and the unemployment rate over the last 21 years. The data allows us to look at two previous recessions, thereby helping us gauge where our initial claims need to be in order to for us to be in another expansion.
As you can see, new unemployment claims in July were a little over 8,300, an increase of over 1,000 from June. The average new monthly claims during this period was about 7,400. During expansionary July months - when the state wasn't in a recession - the average was almost 6,500. During recessionary months, the average was about 8,100. Therefore, based on historical patterns, don't expect to see any signs of strong economic expansion until new jobless claims are the 6,500 mark.