26/9/20: America's Scariest Charts: Duration of Unemployment

 Adding to my prior posts covering:

• Continued unemployment claims: https://trueeconomics.blogspot.com/2020/09/26920-americas-scariest-charts_27.html, and
• Initial unemployment claims and employment: https://trueeconomics.blogspot.com/2020/09/26920-americas-scariest-charts_27.html

Here is analysis of the latest duration of unemployment data, and a look at employment data across past recessions.

As usual with all recessions, average duration of unemployment has fallen in the early days of the pandemic, as new unemployment cases rose dramatically, compared to prior existent claims. Since then, however, average duration has been creeping up. 

As the jobs recovery continues, we will be seeing further increases in the average duration of unemployment as a sign of longer term unemployment, so keep an eye for the future updates to the graph.

At the peak of the pandemic, average duration of unemployment fell to just 6.1 weeks or 15.6 weeks below pre-pandemic average. As of the end of August 2020, average duration of unemployment was at 20.2 weeks, or just 1.54 weeks below the last post-recession period average. 

Taking a slightly different look at the labour markets, consider current employment levels relative to the 6 months pre-COVID19 average levels of employment:

The chart above helps strip out volatility in the levels of employment across the business cycle by using 6 months average levels of employment for the period prior to the onset of the recession as a benchmark and then relating recession period and subsequent recovery period employment levels to this benchmark.

Clearly, current recovery to-date has been sharp, but given the levels of employment contraction in the first months of the pandemic, even this speed of the recovery is not sufficient to bounce employment levels back to where they were during pre-COVID19 period of economic growth. The chart also shows that recovery in employment has slowed down sharply in August, compared to June and July.