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Thursday, January 19, 2012

Initial Claims, Hmmph, Seasonal Adjustments

At first I was very happy, and then I looked at the data and went "WHAT????".Link
Here's the release. Last week the SA number increased, but the YoY raw claims number looked really good, so I didn't think it meant anything bad. The raw initial number last week was 642K versus the prior year's 773K, and that is a big decrease. This week the pattern reversed - the raw initial number is 521K versus 549K in the prior year. However the SA number last year was reported at 415K, and this year it is reported at 352K. So this fluctuation is attributable at least partially to seasonal adjustment factors. This can happen at this time of year as seasonal employment fluctuations hit a high and calendar shifts of a day can make a difference in seasonal adjustments.

The raw numbers don't look bad. The real trend now is probably for a slight increase in initial claims, but again, it's no big move that I can see. That is good since the traveling trend is for weekly seasonally adjusted claims under 400K.

What I normally due for this period is to add a four-week series of raw claims and compare those to the prior year's:
12/25/2010: 525,710
01/01/2011: 578,904
01/08/2011: 773,499
01/15/2011: 549,688
Total: 2,427,801

12/24/2011: 497,689
12/31/2011: 540,067
01/07/2012: 646,219
01/14/2012: 521,613
Total: 2,205,588 (-9.2% )
It looks okay to me! The next two weeks the claims shift down, so we've passed the bulge.

The latest adjustment for covered employment shows a nice uptick - the last quarter was 126,188,733, and when the states reported new data it came to 126,579,970. In the first quarter of 2011 we were still declining, and as of the second quarter of 2011 we started inching up again. This was a nice gain!

For comparison purposes, as of Q1 2010 we were still in the 130,000,000 range, so it has been a long time coming and we have very far to go. The peak covered employment in the last business cycle was 133,902,387 in Q3 2008. Still 7.3 million down. The civilian labor force level is slowly diminishing, so that accounts for dropping unemployment:

I noticed some Fed heads predicting that unemployment would rise. That normally does happen, but I think in this cycle demographics overcomes the enthusiasm effect and the labor force doesn't rebound. One striking effect is the rise in US employment of those who are 65 and older:

The striking correlation between the claims base increases and this graph makes me think that Americans 62 and older account for most of the employment gains in the last year. I think older Americans are going on SS (often early) and then picking up part-time jobs to make ends meet. Usually there is at least a year or two difference between the ages in older couples, and in any case almost all of the gains have been in part-time employment.

The labor market's never been worse for teens and early 20s. I think it may be worse now than during much of the Great Depression.

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