Honestly, if it wasn’t for the media reaction to the weekly initial jobless claim numbers, this would just be a headline. Instead, it’s becoming a weekly installment at Hot Air. Here’s the real perspective — “Weekly initial jobless claims continue to not change significantly in months”:
In the week ending August 13, the advance figure for seasonally adjusted initial claims was 408,000, an increase of 9,000 from the previous week’s revised figure of 399,000. The 4-week moving average was 402,500, a decrease of 3,500 from the previous week’s revised average of 406,000.
The advance seasonally adjusted insured unemployment rate was 2.9 percent for the week ending August 6, unchanged from the prior week’s unrevised rate of 2.9 percent.
The advance number for seasonally adjusted insured unemployment during the week ending August 6 was 3,702,000, an increase of 7,000 from the preceding week’s revised level of 3,695,000. The 4-week moving average was 3,716,000, a decrease of 4,500 from the preceding week’s revised average of 3,720,500.
There is nothing magic about crossing the 400,000 claim level in one direction or another by 9,000 claims. It’s statistical noise. The only barrier reached in either direction is strictly psychological. In terms of macroeconomic indications, a 399K report is just as lousy as a 401K report, except for the individual 399,00 or 401,000 people who had to file claims in any given week. Given the volatility in reporting, a 2% shift from one week to the next isn’t significant at all, the kind of statistical noise that should be expected.
Which is why, of course, that Reuters didn’t expect it:
New U.S. claims for unemployment benefits rose more than expected last week, according to a government report on Thursday that suggested hiring in August was steady but not robust. …
Economists polled by Reuters had forecast claims rising to 400,000. The prior week’s figure was revised up to 399,000 from the previously reported 395,000.
What matters for economic analysis isn’t the specific number in one week, but the range over the last few weeks. The range in Q1 was around 380K; in Q2, it was 420K. So far in Q3, it seems to be right in between, centering around 400K. That doesn’t signify any kind of stable job creation, let alone growth; at best, we’ll see something less than the population-growth-meeting net job creation number of 125,000 on average in that range, as this year has shown.
Unfortunately, after giving the 400K myth of stable job creation a rest one week ago, Andrea Ricci returned to it again this week:
The rise in jobless claims, which took them just above the 400,000 threshold, is unlikely to change perceptions that the economy will dodge another downturn. Claims below the 400,000 mark are usually associated with a stable labor market.
The notion that dropping below 400K is “usually associated with a stable labor market” is utter hogwash. How do I know that? I did what Reuters’ economists keep failing to do — compared weekly initial jobless claim levels with levels of employment:
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.”
Perhaps economic indicators wouldn’t be so surprising for Reuters if they spent more time looking at actual numbers and trends rather than engaging in hopeful spitballing. …
Think I’m fudging those baseline expectatations 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.
There has never been a time when a 400K level of initial weekly jobless claims has been associated with a “stable labor market,” and I challenge Reuters to identify even one period of stable labor markets where we had a 400K range of reports — ever.