Reclaiming Common Sense

The First-time Unemployment Claims Level is at a Level seen

during June... 1972

The Highest level of non-seasonally adjusted (NSA) first-time unemployment (FTU) claims hits after the first of the year. The Lowest first-time unemployment claims has traditionally hit the final week of September, with it recently bottoming during the middle of August. There is a minor secondary spike in Claims around mid-July. The variations between January  and July trend the data lower. The headline number is the seasonally adjusted (SA) FTU value. The seasonal factors used to convert the NSA data to the SA data change week to week, moth to month, season to season, and year to year. The same is true for the continuing claims (CC) data. An  economic urban legend is that we have had over 100 weeks of SA FTU claims under 300,000 claims. Revisions to the seasonal factors, and seasonal factors that skew the data lower than they would have during prior years, meant that the streak was artificially kept alive. What is not an economic urban legend is that we have had fewer that 200,000 non-seasonally adjusted first-time unemployment claims multiple times this year before we get to the historic low time of the year.Will we drop below 175,000 prior to the first week of June? Time will tell. What happened this week?

First-time Claims recorded a value lower than last year, reported it 20,000 higher.  This week the NSA FTU value moved higher by just over 2%. This was expected. The value this week was nearly 28,000 claims lower than the same week last year. This is good news. The SA FTU value was reported higher by over 21,000 claims. Down is up with government math. The data from last week was revised higher from 192,440 to 195,112. This level of NSA FTU claims is not normally seen - it definitely isn't seen this time of the year. How low can this value fall by August or September? Could we be in the 160s and 170s?

First-time claims could have been reported Under 180,000 claims. The SA FTU level should have been reported at most at 223,000 if we used last year's seasonal factor.  If we are going to compare seasonally adjusted data with seasonally adjusted data we have to compare the seasonal factors or use the data from the same week of the year or both.  The seasonal factors used early in the program's history would have yielded a value as low as 169,000 and as "high" as 1750,000. These are seriously good data points. Remember that there were fewer than 53 million covered insured back them and over 140 million covered insured right now.

The continuing Claims data was recorded at 1.992 million - Approaching the value recorded October 7th.... 2006.  We tend to see the lowest levels of continuing claims during the final week of September or the first week of October. There are 230,000 fewer claims this year than last year. Could we drop below 1.3 million claims this October?

The Continuing Claims data was reported at 1.8 Million - Should it have been reported under 1.7 million? Yes. There were 230,000 fewer continuing claims recorded this year compared to last year at this same time of the year. Th SA CC value was only reported 7,000 claims fewer. Two hundred and thirty versus seven. The continuing claims data recorded closest to the employment situation data collection date gives us an idea as to which way the non-seasonally adjusted U-3 unemployment level should be heading.  Tomorrow's U-3 value should fall - the question is how low will it go?

The first-time unemployment claims number is falling for a number of reasons. More people are finding work. More people are working multiple jobs. When multiple job workers lose one job they are not unemployed, they are lesser employed, and there is no less employment insurance other than the back-up job. The continuing claims data follows the first-time claim data by one week.. There will be weekly ups and downs as we head to a low level of NSA FTU and NSA CC claims toward the end of June before the mid-Summer spike before it continues it march lower by the first week of October. The weekly claims data was headline news at the bottom of the hour most Thursdays. Will they report the SA FTU when it falls below 200,000? Will it be "too much" good news?

It's the economy.