Record Low First Time Unemployment Claims Data for
Second Week of February
The weekly unemployment claims data is being actively ignored, once again. The report includes the non-seasonally adjusted (NSA) first-time unemployment (FTU) claims data and the non-seasonally adjusted continuing claims (CC) data. What is reported is the seasonally adjusted (SA) FTU and the SA CC data, when the continuing claims data is mentioned. The unemployment benefits program began January of 1967. There were fewer than 53 million covered insured at the time. Now we have 140 million covered insured. The seasonally factors used to covert the NSA data to the SA data change by category, week, month, season and year. When seasonally adjusted data from different seasons FACTs (False Assertions Considered to be True) are created. What is the truth? What is reality?
First Time Claims Recorded a Drop - Reported a Bump up. The data from last week was revised higher from 240,636 to 242,962. Even so, the NSA FTU value dropped to 233.009 claims. The seasonally adjusted data went from 223,000 claims to 230,000 Claims. Remember that when the SA FTU claims were reported below 300,000 it was reported as the sign of a strong economy.
First-time Unemployment Claims Could have been reported under 200,000. The "headline number was 230,000 SA FTU claims. If we used last year's seasonal factor then the number would have been reported at 226,000. The lowest official SA FTU for this week of the month was 197,000 during February 1969. If we used the same seasonal factor as that week of the year then the SA FTU would have been reported at 184,000 claims not 230,000 claims. If we used the seasonal factors from 2003 then the headline number would have been 207,000. What is the real value?
The Non-Seasonally Adjusted Continuing Claims data was the lowest for the first week of February since 1970. There were 2.7 million continuing claims the first week of February 1971. There were 2.5 million NSA CC during the First week of February 1972. We had 1.83 million claims during the same week of 1970. Remember that we have almost three times as many covered insured as we had during February 1971.
Should they have reported we have 1.9 Million Continuing claims or 1.8 million or 1.708 million? The seasonal factors matter. First-time claims feed into continuing claims. The continuing claims data lags the first-time claims data by one week. The year over year continuing claims drop started during March of 2009. We started the year with fewer continuing claims than January 1972. The reason that the data is seasonally adjusted is due to the regular weekly spikes in claims.
The rest of the people who cover economic data either actively ignore this data of report it as an oddity. There used to be a time when the unemployment report data was breaking news at he bottom of the hour on the Thursday that it was released. If you still read the paper it is probably found as an in-column, below the fold mention. Some sources are reporting it as the lowest level in forty plus years - they are relying on the government data and ignoring the seasonal factors.
What does this have to do with you, the reader? The economic data can help explain what you are seeing in the real world, not in Governmentland. Yesterday we received inflation data that was "higher than expected." It was also lower than January 2017. The data reflected commodity deflation and service inflation. Yesterday we also received the January Retail Sales Report. It was reported that sales fell during January, seasonally adjusted. Non-seasonally January retail sales fall from December to January - it is the post Christmas recovery period. What wasn't reported was that the non-seasonally adjusted sales data was the best total sales data for the month of January ever. We had one of the best January Jobs Reports since 1981 before the data from 2015, 2016, and 2017 were revised. Instead of reporting an enthusiastic 452,000 seasonally adjusted workers being added to the economy it was reported that a ho-hum 196,000 workers joined the private sector this past January.We live in Reality. The government lives in Governmentland.
Why is the data as low as it is? This column has articulated the though that the record low level of full-time employees and the record, or near record, high levels of people working part-time jobs reduced the number of people who are eligible fr unemployment benefits. It was also speculated that the elevated levels of people working multiple jobs, especially multiple part-time jobs, meant that when someone lost one job they still had another job. There is no "lesser employed" insurance program other than having a second job. Seasonal jobs do not count toward the ACA employer mandate to provide insured for full-time workers. Remember that the requirement are based on full-time equivalent hours.
All of this data is interrelated. People need jobs to buy things in the stores. People need full-time jobs to qualify for mortgages, most f the time, in order to buy an existing home or a new construction home. New construction sales spur retail sales, especially in the Home and Garden, Furniture, and electronics and appliance sectors. First-time claims give an insight as to where we may be heading. Next week's continuing claims data will give us an indication on where the Jobs Report U-3 Unemployment data may be recorded. Pay attention to the data, not the reports.
It's the economy.