Hurricane, Wildfires Increase Jobless Claims

Jobless Claims Rise

There is a lot of nuance to the jobless claims report. If you just look at the seasonally adjusted headline data, you’ll miss important details. In the week of September 5th, seasonally adjusted initial claims stayed the same at 884,000 which was above estimates for 828,000. It’s really tough to predict where the seasonal adjustment will take claims. At first glance, it looks like the adjustment brought it closer to non-adjusted claims. 

We won’t have a complete idea what this adjustment does until we have a year of data. So far, we have 2 weeks. It was a bad time to make this change because now we can’t compare current results to the recent recession. However, maybe they felt this makes the data more accurate, so they didn’t want to wait until the labor market normalized.

Bad Weather Increases Claims

Some were expecting an increase in seasonally adjusted claims because they fell so much last week, but that was wrong because there won’t be a mean reversion. This is a wholesale change in the calculation. That’s not to say they won’t ever increase. It’s just that they won’t go back to where they were before unless the economy substantially weakens. 

Non-seasonally adjusted claims rose from 837,000 to 857,000 as you can see from the chart below. That doesn’t mean the economy weakened. It’s lazy to say this was because the economy got worse. It’s very easy to say since the data is still poor (but it’s getting better which is what matters).

(Click on image to enlarge)

The weakness came from the hurricane and wildfires. Claims in Louisiana rose 7,199 which was a 44% increase. Claims in California rose 17,953 which was an 8% increase. Claims in Texas rose 17% or 9,657. Total in those 3 states was more than the national increase. In my opinion, the entire increase in Louisiana was related to the hurricane because it was massive. 

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