Friday, December 20, 2013

November Update on North Carolina Labor and Unemployment Policy

Here are the updated charts:

Considering how strong the national employment report was in November, this is a very strong continuation of the trends in North Carolina.

The unemployment rate in North Carolina dropped 0.6% in November, and has dropped by 1.5% since July.

Relative to national trends, the North Carolina unemployment rate has dropped by 1.0% since July.  At this point, the movement from unemployment looks roughly split.  During this time, North Carolina's Employment-to-Population ratio is up 0.4%, relative to the national number, and its Labor Force Participation rate is down 0.3%.

These are noisy data series, and I still expect the following few months to help break out the noise from the trends.  The October data might have overstated the success of the North Carolina policy.  The November data might be understating it.

I know this is just one state, and that there are a lot of moving parts that make it difficult to draw distinctions with certainty.  But, this is extremely good news.  If this is indicative at all of what we can expect at the national level after EUI lapses, then we could be seeing an unemployment rate under 6% next year.

PS.  One reason I suspect that the activity between January and July may be generally unrelated is that we don't see much change in regular unemployment insurance claims until June:
FRED Graph

And this graph of North Carolina employment shows how difficult it is to differentiate anything from the noise.  The problem is that we consider changes in unemployment of a couple of percent to be catastrophic, so that any issue can be either written off as a rounding error or be cast as the end of the working class, using the same data.  The dip in early 2013 is the mysterious period of employment loss, and the little pick up there at the end is the part that would suggest that EUI was causing disemployment issues.  If we weren't looking for any effect, this line would just look like a normal data series with nothing unusual going on after 2009 - with a few blips and wiggles along the way.
FRED Graph

Here's another update.  And, a couple of closing comments.

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