Jack Dunn - Reclaiming Common Sense

This week we continue to see the weekly unemployment claims at historically low, or near historically low, claims levels depending on how you examine the data. There are two numbers that are often referenced in the media: The First-time Unemployment (FTU) and the Continuing Claims (CC) number. There are non-seasonally adjusted (NSA) and Seasonally Adjusted (SA) versions of each number. The Seasonal Factors used to convert the NSA data that is recorded to the SA data that is reported change from week to week, month to month, and season to season.  When seasonally adjusted data from different seasons are compared FACTs (False Assertions Considered to be True) are created. We have nearly 140,000,000 workers eligible for unemployment benefits compared to 52.8 million workers during August of 1973  (There is no data for 1967-1972 for the covered insured level.) So how did we do this week?

The NSA First-time Claims Level remains BELOW 200,000. There was a time when it was considered to be a healthy economy if we had under 300,000 SA FTU Claims. We have been under 200,000 NSA FTU claims four of the past five weeks.

The Only Time we have had fewer first-time claims during the fourth week of August was during the 1960s. The FTU table that accompanies this article show how the seasonal factors have changed over time and how low our SA FTU claims number could have been reported. We would have to drop by 50,000 claims to hit the all-time low for this time of year. The first-time claims number has not jumped due to Hurricane Harvey because the date for measuring the claims level was the Saturday that Harvey impacted the Texas Coast. The first-time claims number will not jump next week because workers need to be unemployed for one week to claim benefits. We may see a spike two weeks from now. If you examine the graph you can see that we are approaching our annual low level of first-time claims. Normally we bottom out for the year at the end of September.

The Continuing Claims Level Remains Below 1.9 Million - Looking to Drop below 1.8 Million Claimants. We have been lower - during the 1960s. The continuing claims data lags the first-time claims data by one week. There are fewer continuing claims this week of August than during the third week of August 1971. These continuing claims should continue to drop for at least another two weeks.

Tomorrow we will receive the August Jobs Report. The data collection date for that report was two weeks prior to the Hurricane. We may not see the jobs report data impacted until the September or October Jobs reports which will be released during October and November. The question is which sectors will be hit the hardest? Which sectors will be revived due to increased demand in replacement items? What is going to be the impact on the people working multiple jobs? If these people in Texas were working  two jobs and lose "only" one of them they will still be employed. If they were some of those people working two part-time jobs then we will not see a spike in the first-time claims or continuing claims numbers.

We may see a spike in the U-3 number without a Spike in Weekly Claims. We may see a spike in the official U-3 Number  in the jobs report during September and October even without a spike in the weekly data because they are measuring different things. The U-3 number measures the number of people who are actively seeking employment who are unemployed. How will the unemployed impacted by Harvey be counted? Will they be looking for work while trying to recover from the floods? Is this a situation where the U-6 unemployment rate will spike without much impact on the U-3 number or rate? The unemployment claims level can continue to drop for at least the next two weeks.

It's the economy.