Are Initial Unemployment Claims Finally Dropping for Real?

The DOL reported people filing for  initial unemployment insurance benefits  in the week ending on March 9th, 2013 was 332,000, a 10,000 drop from the previous week of 342,000.  This is the lowest weekly initial unemployment claims since January 2008, the start of the recession.  Two months ago initial claims also dropped this low but it was a statistical fluke, the next week claims went up to 371,000.  Is this time finally different?



The statistic to pay attention to is the four week moving average on initial unemployment claims.  The four week moving average decreased 2,750 to 346,750, a level not seen since March 2008.  In the below graph we can the four week moving average is still at recession  levels.  If anyone recalls, even before the Great Recession the job market was not so hot.  The four week moving average, graphed below is set to a log scale, from April 1st, 2007.



Below is the mathematical log of initial weekly unemployment claims.  A log helps remove some statistical noise, it's kind of an averaging and gives a better sense of a pattern.  As we can see, we have a step rise during the height of the recession, but then a leveling, then a very slow decline, or fat tail.  That fat tail has taken over five years to return to early recession levels, but initial claims are still not at pre-recession figures. 



As much as people wish it so, most government data is not complete and not real time.  We have repeatedly warned, ad nauseum, do not bank on the initial claims number reported in the press release for that week.  Initial claims for unemployment benefits is a weekly statistic and that implies a very short time window for data collection, it is always revised the next week, almost always upward.  One can have unusual events which throw off the seasonal adjustment algorithm.  One can have missed timing of events that can also throw a monkey wrench in one week's worth of data.  As we pointed out in our weirdness in initial unemployment claims article, states might not report their quarterly adjustments for emergency unemployment benefits and we had the infamous fiscal cliff push past the final hour, which included extending those unemployment benefits for the long term unemployed. 

Continuing unemployment claims for the previous week decreased, yet we still have large long term unemployed.  The below continuing claims figure doesn't include those receiving extended and emergency unemployment benefits.

The advance number for seasonally adjusted insured unemployment during the week ending March 2 was 3,024,000, a decrease of 89,000 from the preceding week's revised level of 3,113,000. The 4-week moving average was 3,098,250, a decrease of 28,250 from the preceding week's revised average of 3,126,500.

In the week ending February 28th, not seasonally adjusted, the official number of people obtaining some sort of unemployment insurance benefit was 5,619,860 with 1,917,158 people receiving EUC, which was extended to January 2014 in the 11th fiscal cliff hour.  There were 12 million official unemployed in February. .

It does appear initial claims is very slowly returning to normal levels.  That said, because the job market is still so poor, we see nothing on the horizon to show initial unemployment claisms will return to 2007 levels soon.    The initial claims moving average decline does look real and  it's certainly better news than has been seen in a long time.  Yet, celebrating initial unemployment claims that are still as early recession levels is pre-mature, especially with so many still without a job.

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At some point no one left to fire? No country left to outsource?

The initial claims number always posed problems for me vs. the labor participation rate (which seems to be much more important regarding reality, economy). Not because of weekly variance and smoothing and BLS issues, but the whole concept.

Say the recession/Depression Redux is a fire that burns an entire city. Let's call that city The US of Plutocrats and Their Puppets. The fire is started by arsonists that hate fire departments and funding them. Let's call them the Bankster Arson Squad.

First few hours, 600 buildings destroyed per hour. Next few hours, fewer building being destroyed, rate slows down, 450 buildings per hour, less tinder to burn. Finally, a few buildings left, a few fires smoldering in different corners of city, 350 buildings destroyed every hour. Mayor arrives on scene, proclaims things are fantastic because fewer buildings burning. Meanwhile, actual building remaining in city approximately 55% of original. New buildings are constructed, shoddy, lack indoor plumbing, but damn it, good times are here again. Many buildings that still stand require massive efforts just to keep them from collapsing into dust. Mayor claims buildings in city are to blame for fire, decides all buildings will now be built overseas to prevent future fires in his city, fewer buildings will be allowed in his city, and any buildings in his city will have to be imported from overseas because buildings built in the US are poorly constructed ("skills gap" if you will). And the Bankster Arson Squad demands fewer firefighters because they are simply costing too much and have too many regulations and resources that stand in the way of arson, and especially arson-for-hire that Banksters specialize in and are making huge $ from.

So, with approximately 55% of the US of Plutocrats standing among rubble, and "only" 350 buildings being burned vs. 600+ at the height of the fire because there are simply few buildings left to destroy, should we bust out the Dom?

labor flows

Hiring, firing and staying at the job happens all of the time. From the JOLTS report, which has a two month lag, we see they are not increasing hiring but the firing, layoffs have really stopped.

So, assuming there will be an increase in hiring after layoffs have stopped is an assumption on initial claims and with offshore outsourcing, use of foreign guest workers, we're seeing more and more "jobless" recoveries.

They like to blame technological advances and dismiss these yet from other indicators,, such as profits parked offshore to the India BPO industry being 6% of GDP, it's fairly obvious it's a major impact.

If SNAP usage goes down, wages + LFP up = good news

If less people need govt. food assistance (and aren't being forced off assistance), wages go up (at least enough to match inflation for many years), and labor force participation goes way up, then I'll be happy. Right now I'm reading endless ads for jobs that don't pay side-by-side with articles still insisting on skills gap (CNBC and CNN get paid every they mention those words, I think, and to ignore rule that fewer people with skills equals much higher wages for those with requisite skills in a normal world).

And the North Dakota is Nirvana articles are great too in the press. Many people chiming in comments referring to housing costs/issues there, along with the fact many people are not even being considered for jobs after they go out there and with experience. I'm guessing it's like the truck driver shortage, STEM shortage, nurse shortage, etc. and it goes like this - bosses run endless articles talking about job prospects in a field, get everyone applying to the jobs, and wages drop. Watch, visas will be issued for North Dakota because no Americans could be found according to the press.

lobbyists claiming "skills shortage"

Despicable. Frankly people need to start writing Congress, the White house outraged by this for they are out to labor arbitrage America and might very well get away with it.

All of those elements you mention need to improve, if there was a skills shortage we would see a bidding war on salaries, we don't.

Initial claims is fairly well correlated to employment statistics from the past. Similar to how GDP is correlated to hiring.

But flat wages really shows there is no worker shortage.

Skills shortage at McDonalds too

J-1 cultural exchange visa program gets some blowback from the foreign guest exchange students. Something like this happened at Hershey Foods too. Why pay 7.25 an hour and be lucky to get a 16 hour shift. These kids will work endlessly and pay you.

In early March, student workers from Asia and Latin America launched a surprise strike against their employer, a McDonald’s in central Pennsylvania. The students, who paid between $3,000 to $5,000 to come to the United States as part of the J-1 cultural exchange visa program, alleged that they were assigned shifts of up to twenty-five consecutive hours, were paid less than the minimum wage, lived in substandard employer-owned housing and faced retaliation when they raised objections. Hours after the students began their work stoppage, they found themselves locked out of the employer-owned basement where they lived.

So check out our cultures kids! We wont pay our kids minimum wage because we can enslave you! We use labor camps all over the world! Did you think the Homeland would be any different?


Nice, but corporate press will claim American kids are "lazy"

Nice article. In the good days, families and the press would blame the companies if their kids were hardworking and wanted a job but weren't hired quick enough or paid decent wages for summer, part-time, or full-time work. Never mind hiring foreigners on bogus "student visas" over Americans. The sad thing is the wages are basically lower from that time decades ago.

Now all you hear on the corporate owned press is the blaming of applicants themselves. They like to say people that slave away for degrees in every subject imaginable throughout their lives (from calculus to physics to organic chem and engineering and history, nursing, etc., etc.) are all somehow lazy or stupid. The people claiming this never worked summer jobs or dropped out when they actually had to study in college (numerous dropouts that had $ still blame the victims).

They also say it's all a cultural thing because kids getting trophies or something in soccer at a young age or gold stars ruined them?! WTF? Yes, we must beat our kids and give them no praise or positive feedback - corporate drones can't be happy humans or thinking people. That is so idiotic it's not worthy of a response.
Because that somehow means someone who's facing homelessness won't work because of a gold star in drawing 15+ years ago?

Yes, that's it, gold stars and soccer trophies apply to 100% of every American applicant out there, all Americans are ruined by this experience, and it has made them "lazy and stupid." Brilliant, absolute genius presented to us by the rock-bottom of intelligence and integrity. Dropouts that dropped out not because of $ but because they themselves were lazy and now make money for getting fat in TV and radio studios and foreign media owners that inherited the business from their parents are in any position to insult Americans of any age? Nope.

Of course the corporate masters seeking foreign labor and in control of radio stations, TV stations, and newspapers would never be lying to us, it's all our fault, our own culture, and gold stars to blame. Thanks, plutocrats assault us and then we're blamed for it.

In any takeover, it's key that the communications and education be taken over to control the present and future. They have communications. And now witness Murdoch et al. taking over public schools by cutting funding to public schools and pressing more and more for control of public and charter schools (e.g., Klein of NYC working for Murdoch - nice sellout).

We covered McDonald's in this article

We covered the abuses of J-1 Visas in this article along with some citations from a couple of new studies blasting the never ending "worker shortage" claim.

initial unemployment claims staying low

This week was 336,000, an increase of 2,000, which is basically statistical noise.