Chart Therapy: 'Normal' Job Loss Resumes April 24, 2010*** : Planet Money The four-week moving average of new claims for unemployment benefits is going down. It might well go up again, with lots of little peaks and valleys, but overall, it's falling.

Chart Therapy: 'Normal' Job Loss Resumes April 24, 2010***

While you're at it, imagine world peace. Graph by Alyson Hurt of NPR. Math by listener Samuel Rutledge. hide caption

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Graph by Alyson Hurt of NPR. Math by listener Samuel Rutledge.

People often ask what's it like to sift through lousy economic news all day -- you know, the kind that makes you think -1 percent growth in the economy means things are looking up.

Confronting rising unemployment numbers and stagnating wage reports feels about like you'd expect. It's fascinating, and challenging, and very, very sad. Some days I want to write an open letter to the economy: "Dear Recession, You've made your point. Now please go away."

On Thursday, I posted what feels to me like a positive development. The numbers are clouded, but bear with me: The four-week moving average of new claims for unemployment benefits is going down. It might well go up again -- we're seeing lots of little peaks and valleys -- but overall, it's falling.

And just for fun, totally for fun and relief, I wanted to see how long it would have to keep falling this way before we get back to normal. Economists say a healthy range for new claims each week is something like 300,000 to 350,000 -- call it 325,000, for the sake of argument. There's absolutely no predicting whether the current pace of claims will continue; it could easily start falling faster or slower. This is an arbitrary exercise, asterisk, asterisk, asterisk. And even if new claims keep falling at the average of the last three months, there's no guarantee that companies will start hiring so the people already laid-off can get new jobs. Unemployment could keep rising, just as predicted.

However. Armed with data from April 25 through July 25, listener Samuel Rutledge of Eugene, Ore., volunteered to do the math on the four-week moving average. I'll drop his full note below. Here's the key part:

"[I]f the number of new claims continues to decline at the current rate, it will be back to normal in around nine months. This is good, as my wife and I just found out that we're going to have another baby, and it's nice to know that the recovery is on track for when he or she arrives."

I don't know about you, but that made me feel at least moderately better. In our imaginary world, a small slice of normal starts again around April 24, 2010.

Full note from Samuel Rutledge:

There were 559,000 new claims for the 4 week average period around July 25, the most recent period. The difference between 559,000 and the goal of 325,000 is 234,000.

The average decline from one period to another in the data set since April 25 is 6,077. This is the average difference.

234,000 divided by 6,077 is around 39. So the answer is that if the number of new claims continues to decline at the current rate, it will be back to normal in around nine months. This is good, as my wife and I just found out that we're going to have another baby, and it's nice to know that the recovery is on track for when he or she arrives.

The one wrinkle here that I don't know how to iron out is the question of whether there is any trend in the rate of change. That is to say, is the recovery getting faster or slower as it progresses. From a layperson's perspective, there doesn't look like there's a clear trend in the data that it's speeding up or slowing down week by week. But a professional statistician may be able to tease something out that I can't.

Anyone handy with second derivatives?