Grasping Reality on TypePad, by Brad DeLong

Cartoon drawn by David Sipress

Paul Krugman is... Jeremiah!:

Unemployment claims and employment change - Paul Krugman Blog - NYTimes.com: New claims for unemployment insurance are one of the highest-frequency economic indicators we have — that is, the data come in early and often, giving a quicker read than things like employment numbers and unemployment rates. And there’s been some celebrating over the fact that new claims seem to have peaked.

But the level of new claims is basically an indicator of the rate of change of employment. And we are nowhere near the point at which employment looks ready to expand, or for that matter to stop falling at a terrifying rate.

Here’s a plot of new claims (4-week average) (red, right scale) versus the monthly decline in payroll employment (blue, left scale). What the figure suggests is that to stabilize employment, we’d have to see new claims drop below 400,000 or so. We’re nowhere near that point. In fact, a read of the data remains very, very grim.

The cantor will now lead the congregation in that old standby: "Woe is upon us! For He is trampling the unrighteous with hooves of red-hot iron!"