Skip to comments.Dip for New Jobless Claims Likely Temporary
Posted on 01/25/2013 6:41:44 AM PST by Kaslin
Since 23 September 2012, the weekly data for seasonally-adjusted new jobless claims has been especially volatile.
The data reported last week, which applies for the week ending 12 January 2013, would appear to be more of the same. At least, that's what you might first think when you see where the data falls with respect to our statistical equilibrium chart of the trends in new jobless claims.
It looks just like an outlier, right? And truth be told, it definitely is. However, this outlier is not like the others, where we were able to easily identify the cause of the discrepancy with respect to the trend.
Instead, we think something positive might be at work. If it's what we think it is, the low number of initial unemployment insurance claim filings will be with us for another week, which we'll find out later this morning. The bad news is that it won't continue to be with us for much longer than that.
That positive something else is gasoline prices hitting their lows for 2012 some two to three weeks earlier, between 22 December 2012 and 29 December 2012. Here, the national average for retail motor gasoline prices dropped below $3.25 per gallon but more significantly, it dropped near and below $3.00 per gallon in large sections of the United States.
After having been elevated well above that level for the past two years, that threshold might very well mark the point where consumers believe gasoline prices are low, which in turn, might spark extra spending on their part thanks to the related boost in their discretionary income. That in turn would lead employers to retain higher levels of their employees, which would result in a lower level for new jobless claims!
This is very much the flip side to our hypothesis that there is a "high" level for gas prices in the U.S., which we've observed to kick in around a national average price at the pump of $3.50 per gallon. At this level, employers react to consumers having less of their income to spend on other things and the resulting loss to their business revenue by laying off larger numbers of their employees.
We've long noted that there is a 2 to 3 week lag between events like this occurring to when it shows up in the new jobless claims data. That's because most employers are "locked in" to their current payroll cycle - any employee retention decisions they make will take effect with their next payroll cycle. In the United States, with most employers issuing paychecks on an either weekly or biweekly basis, it then takes 2 to 3 weeks for the impact of any layoff decisions to fully show up in the data.
We say that this effect will be short lived, because the extra economic activity that might be associated with this positive factor will disappear after people begin receiving their 2013 paychecks, in which they will see a 2% reduction in their take-home thanks to the expiration of President Obama's Social Security payroll tax cut from 2011.
For a typical American household, that additional money now going to the U.S. government would be the rough equivalent of a sudden $1.40 per gallon increase in the price of motor gasoline in the United States.
The impact of that change will be progressively felt as employers change the amount of their tax withholding on behalf of the U.S. government in 2013. All paychecks should reflect the higher payroll tax by 15 February 2013 and most should see it for paychecks issued in mid-January.
Then again, the sudden dip in new jobless claims could be another data reporting problem, much like California's episode of incompetence back on 6 October 2012. Either way, we'll know what was behind the dip in new jobless claims within the next several weeks.
Meanwhile people on the east coast are freezing and without power because the union bosses won’t let non union workers in to help repair the damage from Sandy and the election is over so Obama and his administration don’t care anymore either. WTG there east coast liberals. You asked for it.
The reduction was caused by a further roll-off of EUC benefits and shifting people from EUC to disability.
This will continue for 3-6 months and then those extended benefits will be gone.
What will they do then?
They’ll simply drop those people out of the work force, call the unemployment rate “miraculously improved by The One” at 5%, and then they’ll recalibrate the labor participation rate so that 40% is the new 100%.
See how leftists/socialists/communists fix everything?
I think the claims will continue to drop as the US workforce
shifts to the 20 hour work week. As employers seek to fill part time slots some that are unemployed will fill in the other half of the part time job.
This column is about initial jobless claims. In short, it discusses apples, and you are talking oranges.
The “Not Seasonally Adjusted” numbers in 2013 are about 10% higher than the corresponding weeks in 2012.
So, do we trust the “Adjusted” or the “Not Adjusted” numbers?
The liars in the government conflate all of the numbers to create whatever number they want.
You are talking about apples and oranges while they are expanding the State, and that is what I am talking about.
Here’s one way you can read the charts for what the real numbers are and what they mean:
And here is another primer for you, so that you can understand how they deliberately intertwine all of these numbers to create the lie they want for that week:
Or you can just pretend that the numbers are all legit and the apples are correctly divided from the oranges.
If so, then you believe that unemployment rate the Statists concocted just before the 2012 presidential election.
Just because a number is illegitimate doesn't mean that you are allowed to fail to understand what comprises it.
So, instead of a primer, let's review: the initial claims number does not include people whose unemployment compensation has expired or people moving from unemployment compensation to disability, as you falsely stated.
Maybe you were thinking about the continuing claims number, but I doubt that also because later you (incorrectly) implied that the labor force participation rate takes into account unemployment compensation as well. It does not.
You'd have a far better success rate at convincing people that the government is cooking the books if you understood how it does so. Reading Denninger (see below) is only a start. It is not your final destination.
"You are talking about apples and oranges while they are expanding the State, and that is what I am talking about." No, you were not. Really.