Reclaiming Common Sense

The weekly unemployment claims data has been so good over the past few years that it is actively being ignored by most media outlets. The readers of this column consistently make the weekly unemployment claims articles one or more of the top ten articles read during any given month. The headline number is the seasonally adjusted (SA) first-time unemployment (FTU) claims data. Reality is the non-seasonally adjusted (NSA) is reality. Another component of the report is the SA Continuing Claims (CC) data. The NSA CC and SA CC data for the week closest to the 12th of the month give us some insight into which way the U-3 unemployment claims number will be heading for the jobs report of that month. We are currently seeing data recorded, NSA, at levels rarely recorded, NSA, and they are being reported, SA. at levels not seen since the 1960s and 1970s when there were 90 million fewer covered insured workers.

The March data was recorded at levels seen last August and during mid-September 2015 and 2016.  The trend line is downward. Could we see the NSA FTU level fall below 170,000 claims by June? Will it be reported? So what happened during the first week of April for first-time claims and the final week of March for continuing claims? Here is the data.

The Non-Seasonally Adjusted First-time Unemployment Claims jumped to 231,388.  This is where the day of the week matters. This data should have only jumped 3% to 5%% this week of the year. The thing is that the data collected on 4/7/2018 is closer to the collection date of 4/8/2017 than 4/1/2017. One days difference on the calendar means one week of difference in the season.

The Seasonally Adjusted First-time claims was reported at 242,000 it could have been reported well under 200,000. This column has repeatedly commented that if you are going to compare seasonally adjusted data compare it with data from at least the same month, same season. Even comparing non-seasonally adjusted from the same week is "dicey" if you do not factor in changes to the number of people who are eligible to claim unemployment benefits. If the authors of the report are going to claims FACTs (False Assertions Considered to be True) then at least compare comparable data from comparable weeks of comparable years.

The Non-Seasonally Adjusted Continuing Claims data was reported under 2 million. The NSA CC value was originally reported at 1.992 million last week. That was revised higher to 2.003 million. This week the NSA CC was recorded at 1,994,554 million claims. This is the lowest this level has been recorded this week of the year since 1971. The first-time claims feed into the continuing claims data. The continuing claims data lag the first-time data by one week.  The most important thing here is to note the "pitchfork." We have not crossed over the middle tine. We will approach the "first" annual low prior to a mid-year uptick and a second leg down until the first week of October. We are 230,000 claims lower this year than last year for the "same week" of the year. Could we end up being around the 1.3 million mark by October? Time will tell.

The Seasonally Adjusted Continuing Claims data should have been reported much lower. The reason that this column spends so much time discussing the difference between NSA and SA data, and the reason why it doesn't make a big deal over the "headline" data, is because the headline data has been massaged and messaged for so many years that people do not realize that the SA data is a poor road map for the wrong interstate. The SA CC was reported at 1.871 million claims. It could have been reported under 1.8 million claims and could have been reported under 1.7 million claims.

Next week we will receive the FTU data closest to the collection date for the April jobs report. The following week we will receive the continuing claims data for the date closest to the jobs report collection date. This data is trending lower through the end of May or June. The first "bottom" to break is the NSA FTU value of 175,000 (June 2, 1973 -- 173,000 NSA FTU Claims.) The first "bottom" for continuing claims is roughly 1.5 million claims (1.542 Million - November 5, 1988.) If we hit these levels on or before these dates this year then we will be truly in uncharted territory. The data should take 2 steps down for every step up for the immediate future. Realize that people are ignoring good news and construing some of the "good news" as bad news because the data is collected during one week versus another week because of one calendar day difference. This was good data. Watch the peaks. Watch the troughs. Watch that middle tine.

It's the economy.