Jack Dunn - Reclaiming Common Sense

Unemployment Claims Report - Ignore Good News at Your Own Risk


The weekly unemployment claims report, and the accompanying unemployment claims data, was released this Thursday. This is not breaking news. The weekly report is released on non-holiday Thursdays every week of the year. What is breaking news is that the unemployment claims data was reported higher than it could have been reported. The non-seasonally adjusted data (NSA) is what is recorded. The seasonally adjusted (SA) data is what is reported. The seasonal factors that are used to convert the NSA data to the SA data change week to week, month to month, season to season, and year to year, as well as between categories. When data from different seasons are compared FACTs (False Assertions Considered to be True) are created. This week we saw strong data recorded - that is the truth.


First-time Claims are still below 300,000 claims, seasonally adjusted or non-seasonally adjusted.  The first time claims ticked slightly higher from 215,775 to 241,568 NSA. The first-time claims data also ticked higher from 229.000 to 239,000 SA claims. The 300,000 level is a "feel good" number. It was good November 7, 2007 before the recession when we had 132.6 million covered insured. It feels good now when we have 140.5 million covered insured.


The Seasonally adjusted data could have been reported at under 230,000 claims. If we used the seasonal factors from the first week of November 2006 we could have seen 227,000 SA FTU claims reported. If we used the seasonal factors from the first week of November 2015 used that number would have been 229,000. The masking of good news by seasonal factors is justified by the masking of bad news by seasonal factors. The data is seasonal. Some people work seasonally. The news industry tends to dumb down this fact. If you lose your job while others are losing theirs it softens the sting. If you hear that people are being hired while you are being fired it stings a little more. The trend is downward, year over year, over year. We will see a spike during Thanksgiving week. We will see a spike after the first of the year.


Continuing Claims ticked up a little - Seasonally adjusted and Non-seasonally Adjusted - It happens this time of year. The data from October 14 was revised slightly higher for the second time. Originally it was recorded at 1,597,654 to 1,603,036 last week. The 1,603.036 value was revised to 1,603,263 this week. It is still near historic lows - going back over 40 years.  There was a low of 1.547 million during the first week of November 1998. Will we hit that low next week? This week the data was recorded at 1.627 million claims.


The Seasonally adjusted Continuing Claims data could have been reported lower. The data for the continuing claims data lags the first-time claims data by one week. The continuing claims data for the fourth week of October was lower this year than during the fourth week of October 1970. It was also lower than the fourth week of October for 1971. This is huge. It is being ignored. We have more than 80 million more covered insured than we had back then. The continuing claims data could have been reported at 1.877 million claims instead of 1.901 million. It is true that it could have been reported over 2 million. This is the problem with seasonally adjusted data. We live in a non-seasonally adjusted world.


We cannot ignore "volatile food and energy" inflation. We cannot ignore changes in retail prices. Next week we will receive information on inflation and retail sales. Fewer unemployed workers should mean more people working. Next week we will receive the FTU claims data for the week closest to the Jobs Report collection date of November 12th. The following week we will receive the continuing claims data for that same week. Next week we will also receive information regarding the MARTS retail report and the CPI inflation rate. The MARTS data will be release November 15th. The CPI data will be released the same day. An economic twofer.


It's the economy.