Is A 12% Decline In Jobless Claims Good Enough?

There is some confusion with the jobless claims report from the week of July 25th. Seasonally adjusted initial claims rose, while unadjusted claims fell. This increase in seasonally adjusted claims was highly predictable because claims on average fall sharply at this time of year. The non-seasonally adjusted average of claims bottoms in September, but this is one of the steepest drops of the year which means the seasonal adjustment pushed claims higher. Since we think this cycle has transformed the labor market and is a much bigger force than seasonality, we prefer the non-seasonally adjusted numbers. On that basis, this was a good report.

Specifically, adjusted claims were up slightly from 1.422 million to 1.434 million which was above estimates for 1.388 million. That fits nicely with the narrative that the labor market hasn’t improved in over a month. However, this time it is incorrect. Unadjusted claims fell from 1.38 million to 1.21 million. That’s a large 171,000 decline which is the biggest since May 30th. The seasonal adjustment will push claims higher again next week. Unadjusted claims will need to fall at least 16,000 to stop adjusted claims from rising.

PUAs fell 106,000 to 830,000 which is a decent improvement. Remember, PUAs can’t be adjusted because this is a new program. As you can see from the chart above, unadjusted claims including PUAs fell 12% which was the biggest decline since late May. The total is still 2.04 million, but it’s making progress. This is great news considering the fact that we are only scratching the surface of a potential decline in COVID-19 cases. Deaths haven’t even peaked yet.

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William K. 1 week ago Member's comment

What seems to be rather confusing is the references to New Jobless Claims, rather than "total jobless claims so far." The problem with the wording is that it seems to me that the numbers stated are the additional jobs lost and not the total number of jobs lost.

Are businesses that were operational now closing and releasing people? That is what my take on the statements is, or are these folks who need to file for unemployment every month, and now are fewer in numbers? A change in reporting word usage could give a clearer picture, but it would be a more disturbing one, I am sure. Telling the total number of unemployment claims instead of just reporting new ones looks like an attempt to avoid telling bad news because it will disturb folks. Not quite openly lying, but certainly hiding the truth.