Jack Dunn - Reclaiming Common Sense

Thursday is the usual release day for the weekly unemployment clams data. The headline number, or the number that used to garner headlines, is the seasonally adjusted (SA) first-time unemployment (FTU) claims data. A second number that used to get a modicum of attention was the seasonally adjusted continuing Claims (CC) data. The problem with relying on the seasonally adjusted data is that the seasonal factors that are used to convert the non-seasonally adjusted (NSA) data to the SA data change by category, wee, month, season, and year.  Anything  below 300,000 SA FTU used to be newsworthy. The problem is that the data was massaged and messaged into a "Unemployment Claims Streak." This unemployment streak is one of the Economic Urban Legends of the past decade. Seasonal factors matter.

The Unadjusted First time Claims data dropped to 360,000 claims. This is the reason why they seasonally adjust the data. Look at the accompanying table. We normally record NSA FTU claims in the 500,000 to 600,000 range. This year we are at 360,000. The peak claims data date is normally the first week of January. The first week of January was lower this year than last year. The first week of January data has declined every January since January 10, 2009 when there were nearly 1 million NSA FTU claims.  part of the drop was a drop in full-time jobs with benefits. Part of the drop in the NSA FTU claims was due to an increase in part-time jobs, without unemployment benefits. Part of the decline has been an increase in multiple job workers - if you lose one job you still have another job. There is not "lesser employment insurance" other than having a second or third job.

The headline number could have been reported under 200,000. It could have been reported under 190,000. It could have been reported under 180,000. Where would the market be heading if they heard that we had 172,000 first-time claims?

Continuing Claims jumped a bit - Still Below First Week of January 2017, and 2016, and 2015, and 2014, and 2013, and 2012, and back to 2000 and further back in time. . Anything under 2 million SA CC is a great number. The first or second week of October tends to be the week with the lowest NSA CC value recorded. The first or second week of January tends to be the highest NSA CC data for the year. The NSA CC reported this week was lower than any "first week of January" this Century. If the headline of this paragraph doesn't grab your attention I do not know what will grab your attention.

Did we have 2.0 Million Seasonally Adjusted Continuing Claims or 1.9 million or 1.8 million? Okay, maybe that opening sentence caught your attention. You have to go back to the first week of 1970 to find lower continuing claims. We had under 55 million covered insured back then. We have just over 140 million covered insured now. We have comparable claims with nearly  three times as many potential claimants.

This data is so good that it is being actively ignored. We are going to have to see seasonally adjusted first-time claims under 200,000 to grab a headline. This is unfortunate. The Department of Labor does not publish the seasonal factors for the year any longer. This is unfortunate. The unemployment benefits program started 51 years ago.  We are seeing claims data almost as low as it was half a century ago. We are seeing truly historic data - not the Fake data that was reported by the Department of Labor and the Media while President Obama was in office. There was no SA FTU streak greater than 52 weeks. The seasonal factors were massaged so that they would not have to change the message.  Now that we are having really good news it is being actively ignored. Let's see what happens with the New Construction data.

It's the economy.