Thursday, May 19, 2011
So the news headline is that the state’s unemployment rate dropped from 7.8% to 7.5%. If you look at the 6 month change it is a full percentage point decline from 8.5% just in October to 7.5% last month. So when was the last time the state saw a full percentage point drop in the unemployment rate over 6 months?
So does that mean there is anything today comparable to 1984? Hmmm. Between April 1983 and April 1984 was probably the peak outmigration from both the Pittsburgh region and the state resulting from the recession and job destruction at the time. That was purely an economic migration generated by young workers fleeing the region. The apparent drop in the unemployment rate back then was all the result of workers looking for work elsewhere. Yet this period of dropping unemployment rate is a period when we think people are on net moving into the Pittsburgh region and most likely Pennsylvania as well. So of the two periods, in one the drop in the unemployment rate is a sign of severe economic weakness. In the other……….
So if you take out the 1983/4 miasmic period, when were the previous times when there was a comparable 6 month drop of a percentage point or more in the state's unemployment rate? One single period ending in November 1975, and another period in the first quarter of 1973, both of which I suspect may have been the end of strikes or the reopening of whole mills as the nation came out of recessions. So there just aren't a lot of recent (recent as in the last half decade or so) examples for the unemployment rate dropping so far so fast.