Thursday, August 25, 2011

Showing a key metric with multiple views: a nice example

Bill McBride's Calculated Risk blog has some crisp charts showing the latest new unemployment claims. The main chart shows this key metric since January 2000.

A second chart shows the same metric going all the way back to January 1971.

Both charts use a 4 week moving average to smooth out the more erratic week to week behavior. Bill's use of a dual chart approach helps present a much more complete picture of this important metric that puts recent behavior in context. Of course, even his "short" period is almost 11 years long so doesn't suffer from the common weakness of plotting too few data points.

Additional employment related charts showing other metrics and other views can be found in the Employment tab of Calculated Risk's Graph Gallery. Bill is prolific and posts some of the best looking, most unique charts related to economics and finance. Check out his gallery for yourself. You won't be disappointed

Despite these two excellent charts, one weakness I see in Calculated Risk's presentation of this important unemployment metric is that the verbal storytelling is weak. Bill's charts have potential explanatory power with important stories to tell, especially combined with the other charts in the Employment tab of the gallery, but these stories are left mostly as an exercise for the viewer.

In the blog post, the "story" told is mostly quotes from the dull boilerplate in the Department of Labor's UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT. This text discusses this metric with a very short term focus of only the preceding 4 weeks.

A second weakness is that the reporting (like almost all other reporting on the subject) only talks about and shows charts for this one Headline Initial Claims metric from the report while other complementary metrics are shunted aside. For example, some key missing metrics that are mentioned in the DOL report and whose short and long term time series charts could help us better understand the unemployment situation include:
  • insured unemployment rate - the percentage of "covered" workers collecting regular state benefits
  • insured unemployment - the number of people currently collecting regular state benefits
  • total persons claiming benefits in all programs
Some other metrics from other sources might also be added to the mix for fuller understanding such as:
  • total persons unemployed
  • percentage of total unemployed who are collecting benefits in all programs
  • total unemployed who are NOT collecting benefits
Note that Calculated Risk's Employment Tab does include these useful and complementary metrics shown in easy to digest graphic form but a story line to tie all these metrics together remains a challenge for another day.
  • headline unemployment percentage
  • employment population ratio
  • participation rate
  • number of workers who are part time for economic reasons
  • number unemployed for over 26 weeks
  • number unemployed for over 26 weeks as percentage of civilian labor force
What other employment related metrics would you like to see?

Do you know of others posting on the initial claims number who are crafting more complete stories than the standard laid down by the DOL report?

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