Jack Dunn - Reclaiming Common Sense

First-time Claims are lower than any point last year or

since September 22, 1973


The weekly unemployment claims data is released on Thursdays almost every week of the year. The seasonally adjusted (SA) first-time unemployment (FTU) claims used to be considered to be strong when they were reported under 300,000. The non-seasonally adjusted FTU claims data has been below 200,000 claims a number of times this year and last year. The seasonal factors used to convert the recorded NSA data to the reported SA data change from week to week, month to month, season to season, and year to year. The second component to the weekly report is the continuing claims. This number has been considered to be good if it is reported under 2 million. It has been recorded under 2 million every week of April this year. So what happened this week?


First-time Unemployment Claims recorded a drop to 186,049. Last week the NSA FTU value was recorded at 199,816. This week that data was revised up to 200,065. Remember that it has been considered to be a strong market of the SA FTU is under 300,000 and now the NSA value is under 200,000. This is the most unloved piece of good news ever.


The Seasonally Adjusted First-time unemployment claims  should have been REPORTED under 200,000. If we used the seasonal factors from the same week of April, the fourth week of April, that has been used during prior Aprils the SA FTU would have been reported under 210,000 and under 200,000. The only other time when we had the NSA FTU claims level lower during the fourth week of April was April 26, 1969. We are seeing September first-time claims levels during April. The question is not "if" we will drop below 180,000 claims, the question is "when."  The new question is can we drop below 150,000 NSA FTU claims this year?


Continuing Claims (CC) data for the third week of April was recorded at 1.735 million claims. This is a drop of over 100,000 from last week's revised 1.864 million NSA CC. The drop in continuing claims has been happening as we have been adding jobs to the economy. It was projected that we could see a drop in the U-3 unemployment level of 250,000 to 1 million people for the month of April in the April Jobs Report that will be released tomorrow.  can we drop below last year's NSA CC low of 1.566 million by the end of June? How low can this number fall? Is the "recent" low of 1.252 million claims within reach by the first week of October? Recent is relative because this happened during October of 1973.


The Seasonally Adjusted Continuing Claims data could have been REPORTED at under 1.6 million claims.  We had fewer continuing claims during the week ending April 21, 2018 than we had during  the week ending April 18, 1970.  They weren't even  covering the number of covered insured 48 years ago. This means that there were probably fewer than 53 million covered insured at that time. This is a big deal. Jobs are rising, per the ADP payroll report that was released yesterday. The Jobs Report U-3 unemployment level Unemployment appears to be falling. The U-3 rate includes those people who are looking for work who may not be receiving unemployment benefits because their lost jobs may have been seasonal or part-time jobs.


We need to watch the mini-peaks and mini-troughs as well as the overall tops and bottoms. The pitchfork model is still displaying a downward trend. WE are below where we "should be" during the month of September and it is only April. Who else is telling you this? We are seeing continuing claims continuing to drop because there are fewer first-time claims.  Individual weeks can record increases and decreases. This is why the headline data is seasonally adjusted. The problem is that when you compare seasonally adjusted data with different seasons FACTs (False Assertions Considered to be True) are created. The data was skewed under President Obama to create the "Under 300,000 seasonally adjusted first time unemployment claims streak. It was an Economic Urban Legend. The streak didn't begin when they said it did. It ended more times than I care to discuss. The data has been messaged, massaged, and revised more times than can be imagined. It is almost a certainty, right now, that we will fall below the 1.566 million NSA CC mark that we saw during October 2017. We have 130,000 fewer continuing claims right now than we had last year at this time. Could we drop below 1.4 million claims by October. Yup. Could we drop below 1.566 million claims by the end of next month? Possibly.


The important thing to understand is that unemployed workers are participants. If the unemployment level falls and jobs are not created in an equal amounts the participation level will fall. The participation rate is calculated by adding the number of full-time jobs, part-time jobs, and unemployed workers and dividing by the workforce population. All three data points have their own seasonal factors. Watch the non-seasonally adjusted data tomorrow. We have seen over 1 million NSA CES(Current Employment Statistics)  Private sector workers added each of the past for Aprils. We have seen full-time and part-time growth the past three Aprils - that has been seasonally adjusted to net CPS job losses. This has caused the participation rate to be reported artificially low.  Who is manipulating the data? The economy is rolling, contrary to what you are hearing the mainstream media.


It's the economy.