Employment Stats Tell Different Stories

By: Betty Beard
The Arizona Republic

June 6, 2008

Arizona's unemployment rate was a relatively low 3.9 percent in May. Large layoffs seem to be infrequent. Jobs are neither increasing nor decreasing.

So things aren't so bad, right?

But economists say official numbers don't always reveal the whole story and layoffs will increase.

University of Arizona economist Marshall Vest said unemployment is hard to calculate, adding the unemployment rate is a badmeasure because it is based on a survey of people actively looking for work and doesn't count those who aren't trying.

So instead, Vest counts the number of initial claims for unemployment insurance, which has been rising rapidly over the past two years. According to his calculations, claims jumped from an annualized rate of 150,000 in early 2006 to 250,000 in the first four months of this year.

"Typically you only see big increases like this just prior to and during recessions," he said. "I think there are a good number of layoffs ahead of us."

Arizona State University economist Lee McPheters agreed. The director of ASU's JPMorgan Chase Economic Outlook Center said this could shape up like the recession of 2001, where job losses really didn't show up until 2002 and 2003.

"If this is consistent with what we saw in 2001, the problems have yet to hit the fan," he said.