Jack Dunn - Reclaiming Common Sense

When will the media actively report on the Unemployment Claims Reports?

The weekly unemployment claims data has been remarkably strong this year. The media  coverage on the weekly unemployment claims report has been extremely weak. The headline number is the seasonally adjusted (SA) first-time unemployment (FTU) claims data. A lesser known metric is the seasonally adjusted continuing claims (CC) data. The underlying non-seasonally adjusted (NSA) data for both the FTU and CC data is actively ignored. There was a time that the "First-time Unemployment Claims Streak" used to receive some attention. It turns out that it was an economic urban legend. The seasonal factors used to convert the NSA FTU data that was recorded to the SA FTU claims data that was reported were massaged in such a way as to keep the streak going longer than it should have gone in the first place. That streak was the "Under 300,000 SA FTU Streak." What would people think if they discovered that we have been under 200,000 NSA FTU claims this year? Two weeks ago? The former administration used to claims FACTS (False Assertions Considered to be True) regarding "lowest first-time claims level since ____" comparing seasonally adjusted data from January with Seasonally Adjusted data from September. This column compares same week data, non-seasonally adjusted. So how did we do this week?

Non-seasonally Adjusted First-time Unemployment claims were recorded at 201,374 claims. Last week we had 206,868 claims recorded. This was revised slightly higher to 207,043 claims. The week prior to that we had 195,214 claims. This is not what is reported. The May 12th data was recorded at 223,000 claims, the May 19th data was reported at 234,000 claims, and this week the SA FTU was 221,000 claims.

The Seasonally Adjusted First-time Unemployment Claims data could have been reported lower than it was reported. The seasonal factors used to convert the NSA FTU data for the fourth week of May vary from year to year. The last time that a NSA FTU value was recorded at this level during the first half of the year was during May of 1973. The NSA FTU values were

• May 5, 1973 NSA 214,000
• May 12, 1973 NSA 198,000
• May 19, 1973 NSA 189,000
• May 26, 1973 NSA 190,000

Here's the problem with comparing these two time-frames. This year we have 141,433,196 covered insured workers right now. We had 58,629,500 covered insured during the week of May 26, 1973.  We have 11,374 more first-time claims this week with 82.803 million more covered insured.

Non-seasonally Adjusted Continuing Claims were recorded at 1,579,407 claimants. last year our low for the NSA CC was recorded during the first week of October at 1.566 million claims. The first week of October or the first week of November tend to have the lowest NSA CC values recorded every year. This level is lower than it was during April 14, 1973. How is it in comparison to the May 1973 data?

• May 5, 1973 NSA 1.539 million
• May 12, 1973 NSA 1.497 million
• May 19, 1973 NSA 1.465 million
• May 26, 1973 NSA 1.407 million

Once again, this continuing claims data is remarkable because we only have 159,000 more NSA CC claims this year than during the same week of 1973, and once again, we have 82.803 million more covered insured. How low can this value fall by the first week of October? Could we challenge the October 6, 1973 value of 1.252 million claims? Will anybody else report it?

The Seasonally Adjusted Continuing Claims value could have been reported under 1.7 million claims.  The seasonal factors used during 1970, 1971, and 1972 for the third week of May would have cause the SA CC value to be reported lower than it was reported.  The continuing claims data could also have been reported higher than it was reported. The problem here is that "nobody" cares about the continuing claims data.

The NSA CC value gives us an insight into where we could see the NSA U-3 unemployment level heading during the Jobs report collection date.  Last week the unemployment claims data was collected on the date closest to the collection date for the Current Population Survey (CPS) data collection date used for the May Jobs Report. This data was used in the May Jobs Report Forecast Article. It was projected that the drop from 1.865 million continuing claims  claim mid April to 1.604 million claims Mid-May  could mean that last month's NSA U-3 unemployment rate could drop from 5.9 to a level between 5.2 million and 5.7 million. The U-3 measures those workers out of work who want work. The NSA CC value records those who had work and are collecting benefits. If it drops below 5.419 million claims it will be the lowest May unemployment level since 1979. It could be the lowest NSA U-3 unemployment level under six Presidents, going back to Reagan.  The data for NSA U-3 Unemployment, post 1970, can be found in the CPS data. It can also be found in this tweet.

This weekly report is important. The unemployment claims streak is "unimportant." As we see more people level the unemployment lines and start filling jobs earnings and consumer spending will rise over prior levels. More earnings, more spending, more retail sales. More sales may mean more jobs,  which may mean for spending and more jobs. We are in a virtuous cycle.

It's the economy.