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Thursday, September 12, 2013

Weekly Unemployment Claims Take a Tumble - But?

Weekly unemployment initial claims decreased significantly, by a whopping 31,000 claims since last week.  But two states, including California, "underreported" so is this decrease meaningful?

(See explanation below.)

Weekly unemployment initial claims decreased by 31,000 this week to 292,000 after decreasing 1,000 last week.  Weekly claims have been decreasing very, very slowly, but they had not been able to break below a mid 300,000 range of claims, as you can see from the chart above.  This is the lowest number of initial claims since 2006-2007, but two states (including California) were upgrading their computer systems and apparently did not submit complete data. We'll have to wait until next week to see if this decline is at all meaningful.

(California claims that problems in its system upgrades impacted only about 5% of claims, but if these were mostly initial claims vs. continuing claims, the 5% could represent about half of this week's decrease.)


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

 

First time seasonally adjusted unemployment jobless claims declined to 292,000  for the week ending September 7th, a decrease of 31,000 claims.  New weekly claims had stayed in the 325,000 to 365,000 range for twenty-one out of twenty-two weeks from March through July, but they have now dropped below 325,000 for three out of the last five weeks.

    

The four-week moving average # of claims, which smooths some of the week-to-week volatility, decreased by 7,500 last week after decreasing by 3,000 the week before.  It is now 321,250.  Initial claims are now at about the same level they were six years ago, in 2007. 


Initial Claims Graph:


The chart at the top of the page is one of the BEST charts for understanding and observing changes in the weekly initial claims numbers over time.  This year (red:  2013) and the past three years (blue:  2010, green:  2011 and black:  2012) 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.  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.
Continuing Claims?

For the week ending August 24th, 4,272,741 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 about 123,000 overall claims since the previous week. The decrease was due mostly to a drop of about 85,000 claims in the number of people receiving benefits in the Regular State program (the first 19 to 26 weeks of benefits).  The number of people receiving benefits under the Federal Extended Benefits program (the "Tiers") dropped about 40,000.  Again, these numbers may be skewed due to computer problems in California and one other state. 

   
The number of regular state claims has been around 3,000,000 in seasonally adjusted numbers since March.  (At the peak of the Crash, in early 2009, about 6,500,000 regular state claims were filed a week.)

Benefits Now vs. a Year Ago? 


About 1,200,000 FEWER people are receiving unemployment benefits now vs. one year ago.  We do not know what has happened to the people who are no longer receiving benefits; we do not know how many of those 1,200,000 people found employment, how many retired, and how many are still looking for work.  We do know that:

  • There are 2,006,000 MORE people reporting themselves as employed than a year ago.
  • There are  2,206,000 MORE non-farm jobs.  
  • We also know that a grand total of 51,864,000 hires have been made by employers between May 2012 and May 2013.  (This number has not yet been updated with numbers for June and July.)  Some people may have been hired more than once during the year, so the number of "hires" is generally higher than the number of people who have been hired.   
  • However, according to the Bureau of Labor Statistics JOLTS (Job Openings, Layoffs, and Turnover Survey) for July 2013, we still have about 3.06 active jobseekers for every job opening out there. 
  • The percent of unemployed people receiving benefits has now dropped to 37.28% for the week ending August 24th.





Current Spring Initial Claims Continue to be the Lowest Since  2007.

From the current report:
In the week ending September 7, the advance figure for seasonally adjusted initial claims was 292,000, a decrease of 31,000 from the previous week's unrevised figure of 323,000. The 4-week moving average was 321,250, a decrease of 7,500 from the previous week's revised average of 328,750.
As usual, to put all of this into perspective, check out the red line on the chart at the top of the page to see where jobless claims are now, in 2013, compared to the past three years.

First time unemployment claims decreased by 31,000 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 weeks.  (The chart above shows REVISED claims numbers.)

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 claims also decreasing.
  
Continuing regular state claims in seasonally adjusted numbers, from people who are continuing to claim unemployment through the initial 19 to 26 week regular unemployment program, decreased by 73,000 for the week ending August 31st after decreasing by 50,000  the week before.  2,871,000 people filed continuing regular state claims in the week ending August 31st.  As a whole, continuing regular claims continue to decline slowly despite some individual weekly increases.  (There were 3,293,000 continuing claims a year ago.)
 

Total number of people receiving unemployment insurance is a very low 37.28% of the officially unemployed for the week ending August 24th.  
The weekly report also tells us the total number of people who are receiving unemployment benefits.  For the week ending August 24th, 4,272,741 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 11,462,000 people who are unemployed in unadjusted numbers according to the monthly August unemployment situation report which was released Friday, September 6th.  Those numbers, showing that only 37.3% 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) Still Not Available in any State

As of the week ending August 24th, only 271 people were still receiving Extended Benefits, as mentioned above.  A year ago, 2,597 people were receiving Extended Benefits.  As recently as April 2012, 412,411 people were receiving Extended Benefits.

Therefore, over the 16 months, 99.99% of the people who were receiving Extended Benefits are no longer receiving such benefits.  We do not know how many of these 412,000 people receiving Extended Benefits in April 2012 have 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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