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Thursday, April 4, 2013

Weekly Initial Unemployment Claims Jump: Sequester Ramifications?

Weekly unemployment initial claims increased for the third week in a row.  Unemployment claims have increased three out of the last six weeks. 

First time unemployment jobless claims increased to 385,000  for the week ending March 30th.   This is a relatively large increase of 28,000; also the week's claims numbers are higher than they were last year in seasonally adjusted numbers.  However, the Department of Labor also readjusted seasonal adjustments with last week's report and the unadjusted "raw" number of people who filed for first time claims is low, only 314,016.  It's really too soon to tell if this week's claims numbers have any meaning other than the usual weekly volatility; however,  this is the highest number of weekly claims since November, when Hurricane Sandy significantly impacted unemployment data.

The four-week moving average # of claims increased by 
11,250 last week after increasing by 2,250 last week.  First time claims continue at about the same level that they were five years ago, in early 2008.  

(Even though these numbers are seasonally adjusted, weekly claims numbers are always a bit volatile and should  only be analyzed in terms of a trend over a period of weeks.  See the graph below.) 

For the week ending March 16th, 5,288,614 people were receiving unemployment benefits under one of the programs that are available (regular state, federal extended unemployment compensation, or a few other smaller programs).  This was a decrease of 167,165 continuing claims since the previous week.  The decrease in continuing claims occurred in both the  Federal Extended Unemployment Benefits program (the "Tiers") as well as claims in the Regular State program (the first 20 to 26 weeks of unemployment benefits).  Claims in the "tiers" decreased about 58,000 whereas claims in the Regular State program decreased about 106,000. 


Percent of Unemployed People Receiving Benefits decreased to about 44.8% for the week ending March 16th.

The chart above is one of the BEST charts for understanding and observing changes in the weekly initial claims numbers over time.  This year (red:  2012-13) and the past three years (blue:  2009-10green:  2010-11 and black:  2011-12) are marked in different colors.  You can see that, as a trend, first time claims for unemployment have declined from one year to the next, even though there are variations within the year.  You can also see the impact of Hurricane Sandy on claims in November 2012.  Though the number of initial unemployment claims has been variable over the past three months, it has continued a downward trajectory.  

Be aware that:
  1. The graph above shows first time claims, so people who have continued to receive benefits or who have lost unemployment benefits are not counted in these numbers.  
  2. They are seasonally adjusted, so most variations caused by weather or holidays are already included in these numbers.  
  3. As these are weekly numbers, they are more volatile than the monthly numbers.

First time unemployment claims increased by 28,000 over those reported last week.  Last week's initial claims numbers were not revised.  There are usually slight upwards revisions  (1,000 to 3,000) in the numbers of initial claims in most of weeks.  Numbers reported this week also reflected changes in seasonal adjustments announced last week.  (The chart above shows REVISED claims numbers.)

As usual, to put this into perspective, check out the red line on the chart above to see where jobless claims are now, in late 2012/early 2013, compared to the past three years.

From the current report:
In the week ending March 30, the advance figure for seasonally adjusted initial claims was 385,000, an increase of 28,000 from the previous week's unrevised figure of 357,000. The 4-week moving average was 354,250, an increase of 11,250 from the previous week's unrevised average of 343,000.
The initial claims as announced last week were 357,000, so the claims from that week were not revised. 

Current January/February/March Initial Claims Continue to be the Lowest Since Late 2007/Early 2008.

As a whole, the current numbers of initial claims continue to be the lowest Winter-Spring initial claims numbers since late 2007/early 2008.

Continuing regular state claims, from people who are continuing to claim unemployment through the initial 20 to 26 week regular unemployment program, declined 8,000 for the week ending March 23rd after decreasing 6,000 the week before.  3,063,000 people filed continuing regular state claims in the week ending March 23rd.  As a whole, continuing regular claims continue to decline despite some individual weekly increases.  (There were 3,361,000 continuing claims a year ago.) 

Total number of people receiving unemployment insurance is 42.3% of the officially unemployed for the week ending March 16th.  

The weekly report also tells us the total number of people who are receiving unemployment benefits.  For the week ending March 16th, 5,288,614 people were receiving unemployment benefits under one of the programs that are available (regular state, extended benefits, federal extended unemployment compensation, or a few other smaller programs).  This compares with 11,815,000 people who are unemployed in unadjusted numbers according to the monthly March unemployment situation report which was released Friday, April 5th.  Those numbers, showing that only 44.8% of the officially unemployed are receiving benefits, should make it clear that people do NOT need to be receiving unemployment insurance to be counted among the unemployed.  (This ratio and these two numbers are NOT seasonally adjusted.)

Extended Benefits (EB) Only Available in Alaska

Extended Benefits claims were only available in Alaska during the week ending March 16th.  

As of the week ending March 16th, only 574 people were still receiving Extended Benefits, as mentioned above.  As recently as last April, 440,660 people were receiving Extended Benefits.

Therefore, over the last eleven months, 99.9% of the people who were receiving Extended Benefits are no longer receiving such benefits.  We do not know how many of these 440,000 people found jobs, how many have another source of income in the family, and how many have nothing. 

To reiterate, while a decrease in the number of people FILING for initial claims is a good thing and indicates that fewer people are being laid off, a decrease in the TOTAL number of people getting unemployment insurance may only show that fewer people are eligible for unemployment insurance benefits.

Any questions or confusion, please leave a comment or email me!

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