First-time Unemployment Claims - FACTs or Fiction
Every week the Department of Labor releases the weekly unemployment claims report and data. The two main data points are the First-time Unemployment (FTU) claims number and the Continuing Claims (CC) Number. The Seasonally Adjusted (SA) FTU number is the prime, headline number. Occasionally a comment will be made regarding the SA CC number. The seasonally adjusted data is the reported data. The Non-Seasonally Adjusted (NSA) data is what is recorded. The seasonal factors used to convert the NSA data to the SA data change from week to week, month to month, season to season and year to year. When data with different seasonal factors are compared FACT (False Assertions Considered to be True) are created.
The administration has compared seasonally adjusted data from different seasons to say that the seasonally adjusted first-time unemployment claims or continuing claims are at ten, twenty ,and forty year lows.They have created a FACT that we have had 79 consecutive months of sub-300,000 SA FTU claims. We have not.
Seasonally Adjusted First-time Claims recorded at 218,3000 - 259,000 claims reported. Even though the NSA FTU claims number bumped up from 215,149 to 218,3000 the SA FTU value was reported as declining from 263,000 to 259,000. Both values are good values. The problem is that the seasonal factor used to convert the NSA value to the SA value is significantly different that was used just a few years ago.
The Seasonal Factor was Skewed higher - Reducing the Seasonally Adjusted Value. When the data is converted you divide the NSA data by the SF (Seasonal Factor)to obtain the SA value. The SF is actually a percentage so 84.2 is actually 84.2% or 0.842. Basic math is when you divide a number by a number less than 1.0 the value increases. This is the reason why the SA FTU is greater than the NSA FTU.
If the Seasonal Factor from September 2014 were used the First-time Claims number would have been reported at 294,000. This column wrote four articles on the FACT of the consecutive months of sub-300k SA FTU. We are not at 79 consecutive weeks of sub-300k claims - we are at 29 weeks. This was the most optimistic SA FTU Number possible. If we would have used last year's seasonal factors the value would have been reported at 258,000. If we used the factors from 2002 or 2003 the value would have been reported at 285,000 or 286,000. Which is it 259,000 or 294,000?
The Continuing Claims Number Dropped below 2 Million Claims. This is another "good" piece of news. This is the lowest level of August continuing claims since 2000. Here is the problem - we have a lower participation rate than we had during 2000. If you look at the participation rate from August of 2000 and August of 2016we should have 10.9 million more participants. Do we have 7.996 million unemployed or over 19 million unemployed? Should we have 2 million claims or 5 million?
The Continuing Claims FACT: We had 1.905 million NSA CC during the Final Week of August 2000 - that was reported at 2.119 million. This week the Final Week of August 2016 data was recorded at 1.974 million and reported at 2.1444 million. If they would have used the same seasonal factor as 2000 it would have been reported at 2.164 million claims.
The unemployment claims data is being manipulated. We are supposed to believe that all is sunshine and unicorns while drowning in an ocean during the middle of a hurricane with sharks in the water. Just because the buoys are defective or not reporting the data properly doesn't mean that there isn't a hurricane coming towards us. Just because we don't have radar coverage or because visual satellites do not receive data a night doesn't mean that the storm isn't there.