Misleading jobless claims data

Jobless claims hit a 5-year high of 448K last week, leaving everyone under the impression that the employment numbers are deteriorating rapidly. However, the massive increase in jobless claims for the past week is very misleading because actual claims fell.

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Jobless claims hit a 5-year high of 448K last week, leaving everyone under the impression that the employment numbers are deteriorating rapidly. However, the massive increase in jobless claims for the past week is very misleading because actual claims fell.


Notice how actual claims have been dropping for two weeks while seasonally-adjusted claims have been rising. This is all due to the seasonal adjustment factors. So, don’t believe what you hear on the radio that claims were their highest in five years. This simply is not true.

What is true is that the employment situation is weak. Initial unemployment claims have been rising. In fact, the 4-week average claims are 80K higher than they were at this time last year. A jump of 50K is a recessionary indicator.

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One other tidbit: seasonally adjusted continuing claims numbers are finally spiking higher three weeks after Congressional authorization to extend unemployment benefits kicked in. Actual claims spiked up three weeks ago, but seasonal adjustment factors didn’t allow this to show in the data until now.


Continuing claims are way up, with over 600K more people on unemployment than at this time last year. This is a major recessionary indicator as a jump of 200K has always heralded recession since the data series started in 1967.

The long and short is we should expect a negative jobs number tomorrow as employment remains weak. It’s just not as weak as the 448,000 number makes it seem.

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