In light of today’s ADP Employment Services report and the upcoming (Friday’s) payrolls report, not to mention the whole ‘jobless recovery’ debate stemming from painfully high unemployment levels, I think it’s time I started to do something no other site seems to be willing to do…. lay out the facts about the whole jobs scenario, and how that matters to investors.

I won’t be able to take care of the whole shebang today, but I can dive into the facts regarding the unemployment rate, new unemployment claims, and continued unemployment claims.

Just to set the tone, I think too many people are convinced – thanks to the media – that the job market is still on its death bed. It’s still rough, but have you seen the trends for ongoing and new claims? They’re both waaaaayyyyy down from peak levels reached between February and May.

Now, it would be unfair to not mention that fact that unemployment benefits have run out for the recession’s earliest victims. They have, which certainly has been some of the reason for the declining continuing claim levels…. some ex-workers simply need not bother to request unemployment. But new claims? New claims are – you know – new. They’re falling too now. (And even the expiration of benefits for those who were first laid off doesn’t fully explain the move from peak levels around 6.9 million per week versus the sub-5 million readings we’re seeing now.)

More importantly, these drastic pullbacks in new and continuing claim levels are consistent with the ends of recessions. And the extent to which we’ve seen this happen of late is more than we can chalk up to volatility. It’s a trend, and one that points to better days.

I know there are a lot of gloom-and-doomers trying to convince everyone otherwise. That’s fine. Just know the facts. If falling unemployment claims aren’t a sign of better days, it would be the first time in the last seven recessions that’s been the case.

But what about unemployment? It’s still high, after all.

Fair enough, but gain, the FACTUAL HISTORY says high unemployment can linger for months of note more than a year after the official end of a recession. Prior to 1990, unemployment rates tended to fall right as the recession ended. In 1990 and 2001 though, unemployment rates continued to rise even though the recession was over…. for more than a year in both cases. So yes, there is such a thing as a jobless recovery.

Bottom line? Ignore the data at you’re own risk. I know the ‘but this time it is different’ argument has been floating around. I distinctly remember the same thing being said in 2001, and vaguely remember the same being said in the early 90’s. Those scenarios may have been different, but it didn’t stop the market from rebounding.

On the chart below, the beginnings of recessions are marked with red up arrows, and the ends of them are marked with green down arrows. Or, they’re highlighted with light blue shading on the S&P 500 index portion of the chart. It’s amazing how the market consistently rebounds months before the recession officially ends. Click here for a larger and longer-term version of the chart below (which only shows limited time and detail).

Unemployment and Claims Trends