Illustrated by Sarah Grillo/Axios
Nearly every Thursday morning this year, amidst reports of layoffs and a softening job market, there was a daunting mystery: the number of new applicants for unemployment benefits was so low.
Important reasons: The job market remains strong, but new seasonally adjusted data show it is not as extremely tight as the weekly under-200,000 figure over the past few months had initially suggested.
- It also shows that the unprecedented economic turmoil in the early stages of the pandemic three years ago continues to make the data more difficult to interpret than usual.
State of play: Weekly billing is a useful early warning system for labor market problems. They tend to bounce within reasonable bounds — about 200,000 people file for unemployment benefits every week in a healthy labor market. More than 400,000 in recession.
- But one week in March 2020, Over 6 million That’s 10 straight weeks of claims of millions in unemployment benefits, and completely exceeds the historical norm.
- This distorted the calculations the Department of Labor makes to correct for normal seasonal data fluctuations. Since then, I’ve been working on these adjustment elements to remove the distortion.
- “Now that the pandemic is impacting the world, [unemployment insurance] A set of claims has been made clearer and corrections have been made to the seasonally adjusted model’s outlier set,” the Labor Department said. Said thursday morning. “These changes should give us a more accurate picture of billing levels and patterns.”
By numbers: Two weeks ago, 198,000 Americans filed for unemployment benefits under the old seasonal adjustment. After applying the new adjustments, that number was 246,000.
- An estimated 228,000 people filed claims last week. While down from the previous week, it’s well above the rate seen this year with previous adjustment methods.
- Prior to the adjustment, we had an average of 194,000 weekly claims in the first three months of the year. That figure is now 220,000.
To the point: The revised figures are still in line with a healthy economy, but not the very hot job market that previous figures suggested. It was a solid year.
- Goldman Sachs’ Lonnie Walker had anticipated the revision in a research note released yesterday titled ‘Don’t be surprised if first unemployment claims jump tomorrow’.
- Walker notes that the higher the number, the less alarming it is, but more in line with the level of layoff notices companies have filed in recent months.