Reclaiming Common Sense

The Weekly Unemployment Claims Data has been remarkable.

Low First-time Claims, Low Continuing Claims, Low Insured Unemployment Rate

The weekly unemployment claims data used to be headline news at the bottom of the hour most Thursdays prior to the 2016 elections. The media missed last year's record 21 weeks with the Non-seasonally adjusted (NSA) First-time Unemployment (FTU Claims being recorded under 200,000 claims. They missed the two year anniversary of the seasonally adjusted (SA) continuing Claims under 2 million claims. They haven't a clue about how low the insured unemployment rate is. They are too obsessed with the Job Openings to U-3 unemployment number comparison. What happened this week?

The non-seasonally adjusted first-time claims level dropped from 204,033 to 187,689 claims.  This is lower than it was during the second week of May 1967 when we had 188,000 claims. This is lower than May 12, 1973 when we had 198,000 claims and 58.629 million covered insured. We have 143.629 million covered insured this week.  We have ten thousand fewer first-time claims this week than we did during 1973 with 87,000,000 more workers covered. This is the sixth time that the NSA FTU has been under 200,000 this year. This is more than we had during all of 2015, 2016, and 2017. This keeps us on track to tie last year's record of 21 weeks under 200,000 NSA FTU claims.

The seasonally adjusted first-time claims number was just 212,000 claims. Remember that anything under 300,000 was considered healthy under former President Obama. We have already had two weeks this year with the SA FTU under 200,000 claims (April 6, April 13.) This is the lowest SA FTU for the second week of May since May 1969.

The non-seasonally adjusted continuing claims level dropped to 1.536 million claims.  The most recent low was 1.542 million claims during October of 1988 until that record was shattered during 2018 when we dropped as low as 1,350,834 claims during October of 2018. This is fewer continuing claims than we had during the May 5, 1973 recording period when there were 1.539 million NSA CC and 56.359 million covered insured.

The seasonally adjusted continuing claims was reported at 1.660 million, down from 1.688 million claims last week. We had 4,000 more continuing claims during the first week of May 1973 and were reported with 100,000 fewer claims than were reported this week. This is one of the reasons that this column focuses on the non-seasonally adjusted data.

The Insured Unemployment rate is lower than it was any week during 1967 through 2017 at 1.07%. The media is obsessed with the U-3 unemployment level being lower than the Job Openings  data from the JOLTS (Job Opening and Labor Turnover Survey) report. Why are they not talking about the IUR? Last year it was 1.13% during the first week of May. Last year the all-time record low was recorded during the first week of October when it hit 0.95%. Could we drop to 0.89% or 0.85% by the first week of October?

Technically, the weekly claims data is considered a "lagging" economic indicator. I would argue that it is a "leading economic indicator." It is a concurrent economic indicator, at the very least. This is data from one data set. The official U-3 unemployment data is from the CPS (Current Population Survey) jobs and unemployed worker data set. The "Jobs" number is from the CES (Current Employment Statistics) worker and wage data. The JOLTS data is comparable to, and different from, the CES worker data. The trend lines for the NSA FTU, NSA CC, and NSA IUR are all pointing to lower and lower values. This should mean that the May Jobs number should record a drop in unemployment and an increase in jobs and workers.This is why it is at l;east a concurrent indicator if not a leading indicator. Next week we will receive the NSA CC value that will be collected closest to the CES and CPS collection dates. How low can we go?

It's the Economy.