How Low Does the Unemployment Claims Data Have to Fall
to Garner Attention?
The weekly unemployment claims data was headline news at the bottom of the hour most Thursdays from 2008 through 2016. Were we under 300,000 seasonally adjusted (SA) first-time unemployment (FTU) claims? Is the "streak" still running. The seasonally adjusted first-time claims streak proposed by the Obama Administration is an economic urban legend. It was a FACT (False Assertion Considered to be True.) The continuing claims data (CC) receives little, if any, attention. The current historically low NSA FTU and NSA CC data is Reality. What happened this past week?
The Continuing Claims Data Fell below 1.6 Million claims. The weekly data was reported at 1.591 million claims, The lowest value we had last year was 1.566 million claims during the first week of October. A recent low was the 1.692 million claims during the first week of October 1999. We are approaching the 1.542 million claims level of the first week of November 1988. We are seeing "Fall" levels of continuing claims data during the Spring. We have 10.69% fewer continuing claims than the same week of May last year. If we see a similar trend through the year then we could have fewer than 1.41 million NSA CC this October. Could 1.25M claims be within reach (October 1973?)
The Continuing Claims data should have been reported lower than it was reported. The official SA CC value was 1.707 million claims. It could have been reported between 1.600 million and 1.703 million.
The First-time Claims Level Remained Below 200,000 , AGAIN. The headline number is the SA FTU value. That value hit 223,000 claims. This value is lower than the SA FTU for the second week of May 1967. The thing to remember here, and with the continuing claims data, is that during 1971 there were 53.2 million covered insured. There are 141 million covered insured right now. The first-time claims data feeds into the continuing claims data. We have to go back to the 1960s to find NSA FTU values below 200,000 claims for the second week of May. We had not been under 200,000 NSA FTU claims between 1974 and 2015. We have seen multiple weeks this year where the NSA FTU has been below 200,000 and we are not at the historic low point of the year for first-time claims. That historic low point is the final week of September.
The First-time Claims data could have been reported under 220,000. Remember that under 300,000 SA FTU was considered the sign of a strong economy. The NSA FTU value is 5% lower this year than last year. The SA FTU value is 6.6% lower than last year. If we maintain this level of reduction in the NSA FTU then the NSA FTU value this September could be 181,000 or lower. The published seasonal factor for the final week of September is 79.8. This would yield a SA FTU value of 227,000.
The weekly unemployment claims data provides an insight into the current labor market prior to the release of the monthly jobs report. Next week's continuing claims data will point us toward what we can expect from the U-3 unemployment data. The March 10, 2018 NSA CC value was 2.1 million. Not all unemployed workers are covered by unemployment benefits (seasonal work, part-time jobs, multiple job workers.) If this represents 1/4 to 1/3 of the unemployed then the unemployment level may drop by well over 1 million workers. The unemployment rate should continue its "free fall."
What happens to average weekly wages as unemployment falls? The theory is that we should continue to see improvement on wages as "non-participants" are "lured" back into the market with higher wages. Wages are rising, contrary to what you are hearing from the Democrats and the mainstream media. This column is expanding the research done the past two months that was used for "Shh... Wages are rising" and "Record Weekly Wages this April." Higher weekly wages should mean more money spent in the economy. More money being spent means that more people should be hiring more workers. More full-time jobs, fewer unemployed workers, means more people will start qualifying for mortgages. We are emerging from the 7 year "blackout" period for people who had bankruptcies and foreclosures at the bottom of the Great Recession. Combine these two factors and we may see people moving from home to home.
Come back next week for the continuing claims data closest to the Jobs Report data collection week.
It's the economy.
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