Thursday, June 18, 2009
In light of today's initial claims report (I refer you to Edward Harrison's, Credit Writedowns, detailed take on the report), I wanted to compare the state claims reports from three states: Oklahoma, Texas, and Michigan.
Why Oklahoma and Texas? Well, Oklahoma City, Oklahoma and McAllen, Texas were among the top three (one and two, actually) employment performers of all 100 metropolitan areas from Brookings MetroMonitor (see this post about the study of metropolitan areas). And Michigan, because that can serve as a proxy for the layoffs in the auto industry.
The chart illustrates the growth of average initial claims in 2009 over the average over 2007 and 2008 for each month through May (since the data is only available through June 6). Note: the data are not seasonally adjusted, and comparing the same month across years extracts the seasonalities. You can get state level data here.
I see two things in this chart. First, the layoffs in Michigan have perplexingly been less severe compared to those in Oklahoma and Texas. To be sure, the level of claims are larger in Michigan than in Texas and Oklahoma, but it is still striking that the surge has not been greater given the problems in the auto industry. Second, Oklahoma and Texas are showing a similar pattern to the national 4-week average - initial claims are receding - while Michigan is heating up.
The second point is important. Even though the auto industry is increasingly adding to the claims pool, the underlying trend is down.