Can We Reconcile Jobless Claims To Payrolls?

The Bureau of Labor Statistics (BLS) estimates that in the month of March 2021 somewhere around 916,000 payrolls were added back to the economy. I have to disclaim the figure simply because the statistics used to create it aren’t really all that precise; piecing together data from a survey of 145,000 business establishments, a fraction of the economy’s total, the government comes up with a 90% (only 90%) confidence interval that’s a few hundred thousand in breadth.

In other words, what the BLS is actually saying about last month is that if it was to resample the same survey respondents 100 times, in 90 of them the agency expects the monthly change for March would come out to somewhere between 803,700 and 1,028,300. It’s hardly the definitive economic accounting thrown around haphazardly each monthly Payroll Friday.

Whether 800k or a million, or anywhere in between, there’s really not much difference since any number within that range is gigantic; the last few months have seen, in every likelihood, a sizable pickup in the labor market rebound.

But while we can be reasonably confident in the BLS’s statistical processing to reach such a conclusion, questions remain about just how much. Very simply, jobless claims.

Back above 700,000 in the latest weekly data, the Department of Labor (DOL) tallied an astounding 2.876 million initial jobless claims filed collectively in March with all the state unemployment insurance agencies. Before last year, those four weeks together would have easily added up to a record amount.

It might seem improbable, then, how March could on the one hand end up so awesome yet on the other so continually terrible; that nearly a million net jobs were added when for the same month this number of unemployment claims (remember, these are “initial” meaning an entirely new layoff, furlough, or some other involuntary separation with each one) could have still been so ungodly huge.

Is it plausible to believe that almost 3 million jobs were destroyed or somehow disappeared but then nearly 4 million others must have been either created or, more likely, taken out of mothballs from their previous COVID hibernation?

Yes. Sort of.

To see what I mean, let’s check some other numbers. We’ll try to repurpose similar data in order to verify the BLS findings – beginning with other BLS data. In this case, JOLTS (estimates for February 2021 released today, one month behind CES).

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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