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Five Economic Reasons to be Thankful


With a Hat Tip to Neil Irwin (he started doing this a few years ago) … here are five economic reasons to be thankful this Thanksgiving …

1) Low unemployment claims.

The number of new claims for unemployment insurance benefits is at the lowest level in 40 years (with a much smaller population back then).  The four week average of new unemployment has fallen to 251,000, down from 297,000 a year ago, and down from the peak of 660,000 during the great recession.

Click on graph for larger image.

Here is a graph of initial weekly unemployment claims.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 251,000.

The low level of claims suggests relatively few layoffs.

2) Job Openings Near Record Levels.

There were 5.5 million job openings in September. This is close to the record high of 5.8 million in April 2016.

Job Openings and Labor Turnover Survey This graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Job openings (yellow) have been above 5 million for 20 consecutive months.

Note that Quits are up 12% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for “quits”).

More job openings, and rising quits, are positive signs for the labor market.

3) Household Debt burdens are near record lows.

Household debt burdens have declined sharply over the last several years.

The Household debt service ratio was at 13.2% in 2007, and has fallen to under 10% now.

Financial ObligationsThe graph, based on data from the Federal Reserve, shows the Total Debt Service Ratio (DSR), and the DSR for mortgages (blue) and consumer debt (yellow).

The overall Debt Service Ratio increased slightly in Q2 2016, and has been moving sideways and is near a record low.  Note: The financial obligation ratio (FOR) was unchanged in Q2 and is also near a record low (not shown).

The DSR for mortgages (blue) are near the low for the last 35 years.  This ratio increased rapidly during the housing bubble, and continued to increase until 2007. With falling interest rates, and less mortgage debt (mostly due to foreclosures), the mortgage ratio has declined significantly.

This data suggests aggregate household cash flow has improved.

4) Gasoline prices are near the lows since the Great Recession.

Gasoline PricesFor consumers, lower gasoline prices are a huge positive.

Here is a 10 year graph from for nationwide gasoline prices.

Gasoline prices are around .12 per gallon, slightly higher than last year at Thanksgiving, and near the lowest since the Great Recession.

5) Wages growth is picking up.

Wages CES, Nominal and RealThis graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka “Establishment”) monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.

The graph shows the nominal year-over-year change in “Average Hourly Earnings” for all private employees.  Nominal wage growth was at 2.8% YoY in October.  This series is noisy, however overall wage growth is trending up – especially over the last year and a half.

There is much more positive economic news – solid auto sales, housing starts increasing, U-3 unemployment rate below 5%, and U-6 rate falling, the recent pickup in GDP – and much more.

There are still problems –  not everyone has participated in the current expansion, wealth and income inequality are record extremes, there is too much student debt, and climate change is posing a real threat to the economy in the future – but there are many economic reasons to be thankful this Thanksgiving.

Happy Thanksgiving to All!
Calculated Risk

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