Do Seasonally Unadjusted Claims for Unemployment Insurance Tell a Different Story?
I have been highlighting bad news in labor markets, in part because I think that the administration's Happy Talk understates the problem, and that the continuous over optimistic takes on the economy have contributed to the insufficient policy response to the unemployment problem. The post yesterday on new claims for unemployment insurance is an example of the focus on negative news in labor markets.
However, Linda Stern notes that the non-seasonally adjusted series for new claims for unemployment insurance tell a slightly different story, a claim I was skeptical of at first since a fall in the unadjusted series isn't informative without comparing it to the average decline for that time period -- just what seasonal adjustment does. But Spencer in Angry Bear explains why this number is meaningful, and why Linda has a point. The non-seasonally adjusted claims number, in context, blunts the negative assessment provided by the seasonally adjusted series I highlighted. The news still isn't great, claims remain far too high, but perhaps the latest upward tick in the seasonally adjusted number isn't as noteworthy as it seems:
Unemployment Claims, by spencer: The market reacted strongly to initial unemployment claims jumping from 488,000 to 500,000. But on a not seasonally adjusted basis claims actually fell from 424,504 to 401,856. In recent weeks the seasonally adjusted claims have been somewhat distorted because GM did not have its usual seasonal shutdown of plants this year. This was also reflected in the very strong industrial production report. So it would be better to not react so strongly to the rise in initial claims to 500,000. GM operating its plants through the usual summer shutdown does distort the data, but it is also a sign that the economy may not be as weak as people suspect. ...Have I been too negative? I don't think so, I still believe we are in for a long, hard recovery and that labor markets need more help from the government, help they aren't getting. But I did want to put yesterday's report in the proper perspective.
