Jack Dunn - Reclaiming Common Sense

The weekly unemployment claims report used to garner headlines at the bottom of the hour every Thursday at 8:30 AM Eastern Time. It was believed that a number of under 300,000 seasonally adjusted first-time unemployment claims reveal the non-seasoned a strong, or at least healthy, economy. Tye problem is that the seasonal factors used to convert the recorded non-seasonally adjusted (NSA) first-time unemployment (FTU) claims data to the seasonally adjusted (SA) FTU claims data changes every week, month, season and year. The economy is thought to be in good shape when the SA FTU number is under 300,000. The former President was touting his Unemployment Claims streak for virtually all of 2016. That was an economic urban legend. It didn't start when they think it did. It ended multiple times. If a SA FTU under 300,000 claims is considered healthy, what does a value under 200,000 claims represent? A robust economy? Right now we have had the NSA FTU recorded under 200,000 thirteen times this year. How good is that? Is this a vigorous economy?

The Non-seasonally Adjusted First-time unemployment claims data has been recorded under 200,000 claims thirteen times this year. The unemployment benefits program began during 1967. That year we had 19 weeks where the NSA FTU was under 200,000 claims. There is no record on the unemployment website that indicates how many people were in the program at is inception. We did not drop below 200,000 claims between 1968 and 1971. We first have data on the number of covered insured during 1972 when there were  52.6 million covered insured. That year we had seven weeks of under 200,000 claims. This year's thirteen weeks on NSA FTU claims under 200,000 ties the most recent record of 1973 when there were 53.1 million covered insured. That year the first week of NSA FTU claims under 200,000 happened during the final week of March and added weeks under 200,000 until the final week of September.

We had no weeks with non-seasonally adjusted first-time unemployment claims under 200,000 for over 40 years. Forty. Years.  Unemployment claims pretty much bumped along between 200,000 claims and 600,000 claims, NSA, between September 29, 1973 and September 12, 2012. Peaks happen "every year" during the first week of January and the troughs normally are recorded the final week of September.  We did have weeks with under 200,000 claims during 1967 during October.  The data indicates that if we have unemployment claims under 200,000 the first week of September that we see NSA FTU under 200,000 claims through September. Last year we had no weeks under 200,000 claims during September, even though we were under 200,000 claims during August, because of Hurricanes Harvey, Irma, and Maria. The SA FTU streak almost ended during that hurricane season.

The under 200,000 tally started earlier than any prior year. We saw the claims drop below 200,000 during February this year. We saw more weeks during March with claims under 200,000 than we had during 1973. We had four weeks during August with NSA FTU claims under 200,000 this year, more than during 1967, 1972, and 1973. We had five weeks during September where the NSA FTU was under 200,000 during both 1967 and 1973. We had our first week during September under 200,000 this past week. The trend-lines are still pointing downward.

This month the NSA FTU "will" fall below 170,000. The NSA FTU value  should fall below 160,000 and possibly 150,000 claims before the end of the month. The NSA FTU value for the first week of September is already lower than it was during September of 1972 and September of 1973. The September low is 135,000 during September of 1968, September 7th. This year the collection date will be September 8th. One day is not much of a difference over a period of 50 years. It is incredibly unlikely that we will see a drop of 35,000 claims this week. It is probable that we will see a drop of  2%, 3%, and even 4% based on the data closest to September 8th. This would yield us an NSA FTU between 165,000 and 168,000 and an SA FTU of between 208,000 and 212,000 claims. Down is up in Governmentland.

The unloved continuing claims data. The first-time claims data feeds into the continuing claims (CC) data. These are the people who had jobs who are looking for work and who qualify for unemployment benefits. The dual gig economy and the elevated level of part-time jobs have meant that the number of workers qualified for receiving unemployment benefits  has actually dropped, not risen. The continuing claims data is approaching a 31 year low. This low was set during the first week of November 1988. This week we will receive the first week of September data because the continuing claims data trails the first time data by one week. The NSA CC value could drop 5% to 6% this week. It fell 8% during 1988. This would drop the NSA CC to between 1.504 million and 1.520 million. You have to go back to December 27, 1969 to find an NSA CC value of 14534 million claims. We could see our lowest NSA CC value during the past 49 years, and because it is not the SA CC value, and because most in the media ignore the continuing claims data, this will be comparable to a Sequoia falling in the forest while nobody is watching or listening.

We do not have "Negative Unemployment." There has been discussion that we have more job openings than unemployed workers. The Jobs Openings (JOLTS) data is a different survey than the Current Population Survey (CPS) Unemployment data. The CPS data is different from the Current Employment Statistics (CES) data. The JOLTS "Quits" data and Job Openings data is comparable to the CES data, like an apple to a pomegranate. We will receive the JOLTS data tomorrow - September 11. All of these data points have NSA and SA components. All of them have different seasonal factors. If you  wanted to say that we have "negative unemployment," more jobs than unemployed workers for years. This has been explained in detail in "June JOLTS: Job Openings off All-Time Peak."It was also addressed in "JOLTing Jobs Opening Data" which covered the May JOLTS data. Tomorrow we receive the July JOLTS data. Remember that last week we received the August Jobs Report. This month's JOLTS data is one month behind the jobs report data. We should continue to see high separation data in the lower paying sectors: Leisure and Hospitality (LAH,) Education/Health Services (EHS,) and Trade, Transportation, and Utilities (TTU.) Not coincidentally, we should also see a considerable number of Job Openings in these sectors.

Workforce Population Matters.  The difference between 200,000 people collecting first-time claims when there are 53 million workers is nowhere as significant as 200,000  claims when there are 142 million workers. The difference between 1.5 million continuing claims when you have 142 million workers is radically different from 1.5 million continuing claims with fewer than 53 million eligible workers. remember that the data is not published back beyond January 2, 1971. The workforce participation fell during the first-term of President Obama as participants left the workforce. The participation rate continued falling during former President Obama's second term because there were more workers coming into the workforce than jobs. President Trump has added jobs faster than the workforce population has been growing. (Please refer to "Four Presidents after 96 months" and "Five Presidents at 19 months."

Participation matters. We are seeing a strong jobs market (CPS) and a strong worker market (CES.) We have truly historically low data CPS U-3 unemployment data and "crazy low" first-time unemployment and continuing unemployment claims data.How low can this data fall? We may find out this September or next September. Historically low Teen Unemployment this past Summer. Forget about it. We had dramatically low teen participation this past July.

The data matters. The weekly unemployment data is better than the unemployment data from the Employment situation report and even better than the job openings data you hear from the JOLTS report. Watch the first-time and continuing claims data this month and be amazed.

It's the economy.