Jack Dunn - Reclaiming Common Sense

The unemployment Benefits Program began during January 1967 with fewer than 53 million covered insured workers. The number of people now "covered" exceeds 141 million people. The data that is the headline number is the seasonally adjusted (SA) first-time-unemployment (FTU) claims data. This number is based on the non-seasonally adjusted data. The seasonal factors that are used to compute the SA FTU number change week to week, month to month, and year to year. The same is true for the non-seasonally adjusted (NSA) continuing claims (CC) data. The continuing claims data lags the first time claims data by one week. One of the economic urban legends of the Obama administration is that we have had over 100 consecutive weeks of under 300,000 SA FTU. T.he truth is that the most recent streak began after Thanksgiving 2016. The current level of NSA FTU claims has been at near record or record low levels for the current week of the month for an extended period of time.

You may not have heard this same exact story because the authors of the report and the mainstream media like to focus on the seasonally adjusted data. If the same seasonal factors were used during 2018 as were used during prior years then we could be reporting SA FTU values under 200,000. What happened this week?

The NSA FTU value is the lowest for the first week of March since March 1, 1969.The Record Low Unemployment Claims Streak took a pause. The NSA FTU value popped up to 226,450. This is not a headline.  It is not a headline because it is such a low level. Last week's value edged slightly higher from 195,931 to 195,871. You didn't hear this number because it is the non-seasonally adjusted data. The data for February 17 was revised lower from 213,239 to 212,213. How low can this number fall? Could we drop to 175,000 by June? Could we drop to 150,000 by September?

The Seasonally adjusted value could have been reported under 220,000. If you are going to compare seasonally adjusted data then use the seasonal factors from the time period with which you are making the comparison. If we used the same seasonal factors that were used during the late 1960s and early 1970s then the SA FTU would have been reported as low as 214,000 claims. We have a lower SA FTU value than any first week of March data for the 2000s and and the 2010s.

The Continuing Claims data dipped. This makes sense after four consecutive weeks of record low first-time claims data. The data for February 10th was revised lower from 2.261 million to 2.260 million claims. The data from February 17th were revised slightly higher from 2.255 million claims to 2.258 million claims. This week the continuing claims level dropped to 2.227 million claims. The NSA CC value can give us a glimpse as to what to expect in the NSA U-3 unemployment level. The data received from the week closest to the 12th of the month indicates that the NSA U-3 level should fall, and that the U-3 rate should drop significantly if the NSA full-time jobs number and the NSA PT job number jump as much as expected.

The Continuing Claims data could have been reported lower than it was reported. The SA CC value is being reported under 2 million claims. This was thought to be a significant level of claims. The continuing claims data is lower than it was during 2000. We have to look at data from the Fall to find lower NSA values, not necessarily lower SA CC. The SA CC value could have been reported under 1.8 million claims and even under 1.7 million claims.

Seasonally adjusted data is the bane of this website. The rest of the world is okay with the seasonally adjusted data.  What if we seasonally adjusted you paycheck? Would we use the continuing claims seasonal factor or the first-time claims data? If we used this weeks FTU seasonal factor and you earned $2000 a week then you would have earned $2040 this week. That's a good deal. What if we used this week's CC seasonal factor? How does $1679 sound? If you are expecting to be paid $2000 this week it would be very bad.

The unemployment claims data today was remarkable. The data was remarkable. Even though the data jumped a bit from the data received last week, the first-time unemployment claims data is near 50 year lows for this time of year. The continuing claims data tells a similar story. This is all the more remarkable because we have 141 million covered insured right now compared to the roughly 53 million covered insured back during the early 1970s. We have more people working and we have more full-time jobs than we did back then. This column cut its teeth attempting to forecast what was going to happen with regard to unemployment claims. There was a bit of a curve ball thrown when the number of part-time jobs surged, as part-time employees do not qualify for unemployment benefits. The surging number of people working two jobs also skewed the data lower than would have been projected.  People who lose one job who still have another job do not receive "lesser employed" insurance. We had a record level of January workers working two part-time jobs. We saw the second highest January level of people working multiple jobs. The jobs forecast from this column projected that we should see a spike in the number of people working two part-time jobs during February. It is also possible that we will see an uptick in the number of people working a full-time job and a part-time job. Tomorrow will be interesting.

Tomorrow will be fun - so will next week. Watch the twitter feed for snapshots of the data. There will be posts for the Household data, or CPS jobs and unemployment data, and the Establishment Data, or CES worker data. There will also be snapshots of the unemployment data and the multiple job data. The first article will look at the CES and CPS data for jobs, unemployment and participation. Next week multiple articles will be written regarding the "Five Presidents" at 13 months, the "War on (Wo)Men" article, the "Red, Gray and Blue" aging workforce article, and the Sector data, as well as the multiple job worker data.

It's the economy.