Jack Dunn - Reclaiming Common Sense

This week we received the first-time unemployment (FTU) claims data for the third week of June. We also received the continuing claims (CC) data for the second week of June. The CC data trails the FTU data by one week. The CC data gives an insight as to which direction the Monthly U-3 unemployment claims data is heading for the June Jobs Report that will be released at the start of July.  WE have been receiving remarkably low unemployment claims data, FTU and CC, for an extended period of time. The problem is that the data that is recorded is the non-seasonally adjusted (NSA) data and the data that is reported is the seasonally adjusted data (SA.) The seasonal factors change by category, week, month, season, and year. The changes in the seasonal factors created the economic urban legend of President Obama's Consecutive weeks of fewer than 300,000 SA FTU claims Streak. The same is true for his "Job" creation streak that was really a private sector worker streak, while most in the media discuss non-farm payroll numbers. Earlier today a tweet sent out by this author projected the possible decline of NSA FTU to under 200,000 claims, again, and the potential for another drop in the NSA CC, staying under 1.6 million. What was recorded and what was reported?

First-time Claims recorded a slight drop to 205,583 claims. While this number is not under 200,000, it was a drop greater than 5%. It was also lower for the third week of June 2018 than the third week of June 1970, 1971, and 1972.

First-time Claims could have been reported lower if we used the seasonal factor for June 16, 2012. We are only talking about  a difference of 1,500 claims. It still could have been reported lower than it was reported.

Continuing Claims recorded a slight uptick to 1.585 million continuing claims. This is the lowest it has been during this time of the year since 1973. We have roughly the same continuing claims data as we did during October of 2017, the month where we normally set the lowest level for the year.

Continuing Claims could have been reported under 1.7 million seasonally adjusted continuing claims. This number is normally "totally ignored." Where the people who report on this data normally make a 5 second comment on the first-time claims data, there is rarely any conversation regarding the NSA or SA CC values.

The Insured Unemployment Rate is steady at 1.1%. It was reported at 1.2%. That is seriously low.

What this means for the June U-3 Unemployment Level. This collection date is for June 9th. The Collection date for U-3 data was roughly June 12th. The May 12th data was 1.604 million claims. Not everyone who is unemployed receives unemployment benefits, such as people working multiple jobs who lose one job or those who work part-time. Unemployment has been falling as people re-enter the workforce and find jobs, full-time or part-time. This week the NSA CC is lower by 120,000 claims. We should see the already historically low SA U-3 Unemployment rate fall. We should see the NSA U-3 level approach 5.5 Million. 

This data is very good. Next week's continuing claims data may drop, and it may show that the U-3 rate and level could both fall even lower than is expected based on this data from 3 days prior to the collection date.  Low first-time claims this week mean that the continuing claims should drop next week. Pay attention to this data.

It's the economy