New Jobless Claims: Thunderdome Edition

Townhall.com ^ | May 4, 2012 | Political Calculations

[Kaslin]

Previously, we advanced two possible hypotheses that might explain what is currently happening with the number of seasonally-adjusted initial unemployment insurance claim applications being filed in the U.S. each week:

1. The number of new jobless claims filed each week is in the process of leveling out somewhere between 370,000 and 380,000, which is about 60,000-70,000 higher than the typical levels that were recorded before the December 2007 recession began.
2. Rising oil and gasoline prices in the U.S. have derailed the most recent falling trend in new jobless claims, and a new, negative trend has begun where the number of claims filed each week is rising.

In that post, we indicated that we might not know which hypothesis was correct until sometime this summer. But that was before the U.S. Bureau of Labor Statistics released its initial estimate of the number of new jobless benefit claim filings on Thursday, 26 April 2012. Now, it is very possible we might know the answer as early as this upcoming Thursday, 3 May 2012.

We've updated both charts showing our two hypotheses to incorporate the data as it stands as of the BLS' 26 April 2012 report. The first chart illustrates our first hypothesis:

In this chart, we would seem to be realizing our first hypothesis, in that the indicated trend, which we've identified as Trend I, is in the process of flatlining.

Now take a closer look. Focusing in on the data from 4 February 2012 through 31 March 2012, we see that the mean trend line for all data reported since 3 December 2011 has shifted in the past week so that all but one of these data points are below the line.

Following the well-established rules developed by Western Electric over half a century ago to determine whether or not an existing trend has broken down after having been in statistical equilibrium, which are visually depicted in the bell-curve image (it's not there for decoration!), we find that all it would take for us to declare this hypothesis to be false is for the most recent data, for the week ending 21 April 2012, to be revised upward by more that 2,000 claims, as the resulting change in the mean trend line will place the data for these nine consecutive weeks below it.

If the BLS keeps to its recent track record, it will definitely be revising the number of new jobless claims recorded for the week ending 21 April 2012 upward when it revises its data for that week this Thursday, 3 May 2012 - the only question is by how much.

Our second chart shows what the new trend would look like at this point in time:

This Thursday, our two hypotheses regarding the current trend in new jobless benefit claim filings will enter the theoretical Thunderdome, and very possibly, only one will leave. Stay tuned!

[Kaslin]

Steve Doocy just announced on Fox and Friends that the unemployment rate fell to 8.1%

Sure looks like a lot of number fixing going on. There is no way it should have gone down

[CaptainK]

It’s going down because so many people have stopped looking for a jobs.

If everyone stops looking the unemployment rate will be 0 by election day.

[ThunderSleeps]

Sure looks like a lot of number fixing going on.

Between now and the election there is absolutely no way you can trust any employment or economic numbers being "reported" by the administration and/or the MSM. No way.

They will report signs of recovery in multiple sectors of the economy. They'll report job growth, housing starts, fewer businesses failing, etc. All rosy indicators. All made up.

Ok, there may be a few niches with some real recovery. But nothing like the storm of lies that is coming. Don't trust anything you get from the MSM - not that I do anyway. But now, look for them to be completely in the tank for their fellow socialists/fascists.

[JPG]

That is correct and the bad news for Obie is that the reason for the drop is being included in the media’s breathless reporting. It stinks and they can’t hide the smell any longer.

[Smokin' Joe]

Start with 52 weeks of benefits. Add 99 weeks of benefit extensions. Get laid off in the first year of the Obamites' run, and you are falling off the unemployment rolls about...now.

Now, because you no longer qualify for Federal unemployment benefits, if you don't have a job, you don't count. You are a 'discouraged worker' or some such and no longer in the labor force.

Fewer people in the labor force, divided into (the number who are officially out of work (declining also), means the fraction of officially unemployed people will get smaller as the (former) workers are no longer officially part of the labor force.

The timing is such that the numbers should just get better running up to the election as more out of work workers who are no longer officially unemployed are discarded from the labor rolls.

Probably no coincidence, either.

[Skylab]

“Ok, there may be a few niches with some real recovery”

You know one segment of the job market where there is no recovery? Government jobs, over half a million lost under Obama.

[CaptainK]

All the unemployed will know they are unemployed when they enter the voting booth in November.

No amount of number spinning will make them believe they have a job.

[cuban leaf]

Dang. I could get laid off today and unemployment could tide me over until I’m eligible for SS. HAHAHAHA!

[NonValueAdded]

Correction follows:

It’s going down because so many people have stopped being counted as looking for a jobs.

[khelus]

People Not In Labor Force Soar By 522,000, Labor Force Participation Rate Lowest Since 1981

[1rudeboy]

Now, because you no longer qualify for Federal unemployment benefits, if you don't have a job, you don't count.

False. Unemployment compensation has nothing to do with how the unemployment rate is calculated.

[Smokin' Joe]

Well, maybe I am wrong, but I had been brought to believe that if you no longer qualified for benefits, you were removed from the officially unemployed. Note that the statistic used is one of initial jobless claims (unemployment), not who lost a job. If you can't claim, you aren't counted.

Now, if I'm wrong, kindly show me how and provide some links so I can be better educated on the subject. Thanks.

[1rudeboy]

My pleasure. The following provides a number of reasons why making unemployment compensation a factor in calculating the unemployment rate is unsound (statistically).

What do the unemployment insurance (UI) figures measure?

The UI figures are not produced by the Bureau of Labor Statistics. Statistics on insured unemployment in the United States are collected as a by-product of UI programs. Workers who lose their jobs and are covered by these programs typically file claims ("initial claims") that serve as notice that they are beginning a period of unemployment. Claimants who qualify for benefits are counted in the insured unemployment figures (as "continued claims"). Data on UI claims are maintained by the Employment and Training Administration, an agency of the U.S. Department of Labor, and are available on the Internet at: http://workforcesecurity.doleta.gov/unemploy/claims.asp.

These data are not used to measure total unemployment because they exclude several important groups. To begin with, not all workers are covered by UI programs. For example, self-employed workers, unpaid family workers, workers in certain not-for-profit organizations, and several other small (primarily seasonal) worker categories are not covered. In addition, the insured unemployed exclude the following:

• Unemployed workers who have exhausted their benefits
• Unemployed workers who have not yet earned benefit rights (such as new entrants or reentrants to the labor force)
• Disqualified workers whose unemployment is considered to have resulted from their own actions rather than from economic conditions; for example, a worker discharged for misconduct on the job
• Otherwise eligible unemployed persons who do not file for benefits

Current Population Survey FAQ's, Bureau of Labor Statistics.

To summarize: the government keeps track of the number of folks receiving UI. It results in the numbers reported as "initial claims" and "continuing claims." Those two numbers stand alone from the "unemployment rate" (U-3 or otherwise). The "labor force participation rate" (which is the primary method to massage the U-3 number) also has nothing to do with the number of folks receiving or not receiving UI.

[kiryandil]

False. Unemployment compensation has nothing to do with how the unemployment rate is calculated.

Nice change of subject, rude. But you already knew that...

Smokin' Joe: Now, because you no longer qualify for Federal unemployment benefits, if you don't have a job, you don't count. You are a 'discouraged worker' or some such and no longer in the labor force.

True.

[kiryandil]

See my post #14. I meant to ping you to it, but got my foot stuck in the BS.

[1rudeboy]

Read my #13 and weep that you didn’t.

[kiryandil]

Your crap’s not worth reading.

[kiryandil]

rude is just blowing smoke. The unemployment rate depends heavily on the labor participation rate.

Here is an actual Fed economist on the subject (not some anonymous Interwebs sniper with an unknown agenda):

"Interpreting the Recent Decline in Labor Force Participation" - Willem Van Zandweghe (in the Economic Review of the Federal Reserve Bank of Kansas City. )
http://www.kc.frb.org/Publicat/EconRev/PDF/12q1VanZandweghe.pdf

Published 1st quarter, 2012.

[1rudeboy]

I'm just doing my part to challenge probably the single most persistent economic myth on FR. You are trying to perpetuate it. I will tell you this: you shouldn't use technical economic terms if you do not understand what they mean.

And it's bad form to parachute onto a thread accusing anyone of BS when they've cited to authority. The "hidden agenda" stuff I can leave behind. Jonah Goldberg illustrated how the allegation is a symptom of a weak mind.

So, if I am engaged in BS (with an alleged hidden agenda), you should have no trouble demonstrating it. Otherwise, you are just talking out of your behind.

[1rudeboy]

One more thing--your comment that,

the "unemployment rate depends heavily on the labor participation rate," and my comment that,

the "'labor force participation rate' (which is the primary method to massage the U-3 number) also has nothing to do with the number of folks receiving or not receiving UI" does not contradict mine.

They simply do not contradict each other. You just might be too dense to see it. Looks like my crap is worth reading, after all.