Jack Dunn - Reclaiming Common Sense

The weekly unemployment claims data used to be a headline number most Thursdays at 8:30 AM Eastern Time. The data is being actively ignored at this time. The data that is recorded is the Non-seasonally adjusted (NSA) first-time unemployment (FTU) claims data and the NSA Continuing Claims (CC) data. The headline value is the seasonally adjusted (SA) FTU data. The SA CC is rarely discussed. The thought going into this report was that the NSA FTU value could drop by 10%, 15%, or even 20% and that a new record for the NSA FTU value for the fourth week of July would be set this week. What happened this week?

We set a record low for the Non-Seasonally Adjusted First-time claims for the Fourth Week of July. You have to go back to September 8, 1973 or June 2, 1973 to find a lower NSA FTU value. We may not have hit bottom as of yet. The recorded value was 179,538. We have to get below 208,000 SA FTU to get the media's attention.

The Seasonally Adjusted First-time Claims should have been reported below 200,000. If you look at the seasonal factors used during prior years for the fourth week of July we could have seen the reported value under 200,000. It could have been reported under 190,000. It could have been even reported under 160,000 SA FTU Claims. We have 2 more month of declining NSA FTU claims possible.

The Continuing Claims Data Continues to fall. The first-time claims data feeds into the continuing claims data. The continuing claims data lags the FTU data by one week. The continuing claims data is different from the U-3 unemployment level reported in the jobs report. Those who receive continuing claims had jobs, lost them, and were eligible for unemployment benefits. Those who are counted as unemployed in the Jobs report may not qualify for unemployment because their unemployment benefits have expired or they may have worked jobs that did not qualify for benefits. They may not have worked during the past 6, 12, 18, 24, or 96 months. Continuing claims almost dropped below 1.7 million. Last year we achieved a value of 1.56 million claims during October. The first week of October is the historic low point of the year. We should break through this low within the next few weeks. The question is whether or not we could drop below 1.25 million by this October. Maybe they will start reporting this data seeing as how they are obsessed with the more job openings than U-3 unemployed "FACT."

The Continuing Claims data could have been reported under 1.7 Million. We had 1.739 million SA FTU during April 11, 1973. Could we see a value of 1.7 million reported this year? Yes. Could we see a value of 1.5 million reported this year? It depends on the week that it happens, the seasonal factor used to convert the NSA data to the SA data, and it also depends if they revise the seasonal factors before we hit that NSA level. We would have to hit 1.4 million NSA CC during the next five weeks to have a value reported under 1.5 million, if they would report it at all.

The economy is rolling. We received a strong ADP payroll report yesterday. The month to month growth, seasonally adjusted, was one of the strongest seen for the month of June since the Great Recession. The Annual rate of growth was stronger than June 2018 and stronger than July 2017. This column has forecasted a strong July Employment Situation Report. Watch the revisions to the May and June data. The May and June  ADP Data were revised higher. The upward revisions "borrowed" growth from July.Non-seasonally adjusted U-3 may tick higher for July. The SA U-3 level may also increase. Participation is almost guaranteed to improve and be the best NSA participation rate since 2014. The NSA value will probably remain below 64%.  This column will write numerous articles on the Jobs Report Data. Expect fireworks.

It's the Economy.