When I first looked at the weekly report from the Department of Labor on initial jobless claims, it didn’t look like news to me. The number remained virtually unchanged from last week, going from 429,000 to 428,000, which barely qualifies as statistical noise:
In the week ending June 25, the advance figure for seasonally adjusted initial claims was 428,000, a decrease of 1,000 from the previous week’s unrevised figure of 429,000. The 4-week moving average was 426,750, an increase of 500 from the previous week’s unrevised average of 426,250.
The advance seasonally adjusted insured unemployment rate was 2.9 percent for the week ending June 18, a decrease of 0.1 percentage point from the prior week’s revised rate of 3.0 percent.
The advance number for seasonally adjusted insured unemployment during the week ending June 18 was 3,702,000, a decrease of 12,000 from the preceding week’s revised level of 3,714,000. The 4-week moving average was 3,703,500, a decrease of 11,250 from the preceding week’s revised average of 3,714,750.
The near-equality of the claims number to the weekly average speaks to the consistency seen in the numbers since early April. Claims rose as the second quarter began, with a significant spike from the Q1 range of 380K and spiked upward to over 470K before settling in around 425K. As I noted last week, the data is as consistent and predictable as anything we’ve seen over the last six months.
So, it’s not really news, or it wasn’t — until news outlets decided to spin the results a little, as Steve Eggleston caught. The AP didn’t try making this week’s numbers look good or overstate the miniscule drop of 1,000 claims, but the outlet did spin the Q1 level:
Applications had fallen in February to 375,000, a level that signals sustainable job growth. They stayed below 400,000 for seven of nine weeks. But applications then surged to an eight-month high of 478,000 in April and have shown only modest improvement since that time.
The four-week average, a less volatile measure, has been stuck at about 426,000 for a month.
Reuters was even worse:
It was the 12th straight week that claims have been above 400,000, a level that is usually associated with a stable labor market. Employment stumbled badly in May, with employers adding just 54,000 jobs — the fewest in eight months.
No, the 375K level does not signal sustainable job growth, and the 400K level doesn’t signal job-market stability, either. I covered this in last week’s analysis, where I used actual DoL data to determine what initial jobless claims level was associated with growth and stability. The only time we’ve gotten to 400K before Obama took office was when we were heading into unemployment crises. And periods associated with sustainable job growth had averages and medians at the 325K level, not the 375K level:
Take a look at the historical series of weekly claims between December 2005 and December 2007, the last time we really had “stability” in the labor force. The highest number in that period was 355,000 in a week, and that was in December 2007 when the economy slid into recession. In fact, between January 2004 and January 2008, we had only two weeks of 400K-level weekly claims, both in September 2005, and they were very much the exception. The average for that four-year span is 326,735, and the median number is 324,000 — which is why I usually use the 325K number in my analyses. We actually didn’t get to the 400K level until July 2008, at which point no one considered the labor market “stable.” …
Think I’m fudging those baseline expectations by using the supposedly “overheated” Bush economic expansion? Well, take a look at the same series for the four years between 1996 and 1999. The average number of initial jobless claims per week in that period was 321,986, and the median was 317,500. There was exactly one week of 400,000 or more claims in a week, and that took place in January 1996.
Perhaps if the AP and Reuters used actual data rather than listen to White House shills on economics, they wouldn’t have to use “unexpectedly” in their reports so often.
Update: CNBC switched to the Reuters report, so I updated the AP link.