The DOL reported people filing for initial unemployment insurance benefits in the week ending on March 9th, 2013 was 332,000, a 10,000 drop from the previous week of 342,000. This is the lowest weekly initial unemployment claims since January 2008, the start of the recession. Two months ago initial claims also dropped this low but it was a statistical fluke, the next week claims went up to 371,000. Is this time finally different?
The statistic to pay attention to is the four week moving average on initial unemployment claims. The four week moving average decreased 2,750 to 346,750, a level not seen since March 2008. In the below graph we can the four week moving average is still at recession levels. If anyone recalls, even before the Great Recession the job market was not so hot. The four week moving average, graphed below is set to a log scale, from April 1st, 2007.
Below is the mathematical log of initial weekly unemployment claims. A log helps remove some statistical noise, it's kind of an averaging and gives a better sense of a pattern. As we can see, we have a step rise during the height of the recession, but then a leveling, then a very slow decline, or fat tail. That fat tail has taken over five years to return to early recession levels, but initial claims are still not at pre-recession figures.
As much as people wish it so, most government data is not complete and not real time. We have repeatedly warned, ad nauseum, do not bank on the initial claims number reported in the press release for that week. Initial claims for unemployment benefits is a weekly statistic and that implies a very short time window for data collection, it is always revised the next week, almost always upward. One can have unusual events which throw off the seasonal adjustment algorithm. One can have missed timing of events that can also throw a monkey wrench in one week's worth of data. As we pointed out in our weirdness in initial unemployment claims article, states might not report their quarterly adjustments for emergency unemployment benefits and we had the infamous fiscal cliff push past the final hour, which included extending those unemployment benefits for the long term unemployed.
Continuing unemployment claims for the previous week decreased, yet we still have large long term unemployed. The below continuing claims figure doesn't include those receiving extended and emergency unemployment benefits.
The advance number for seasonally adjusted insured unemployment during the week ending March 2 was 3,024,000, a decrease of 89,000 from the preceding week's revised level of 3,113,000. The 4-week moving average was 3,098,250, a decrease of 28,250 from the preceding week's revised average of 3,126,500.
In the week ending February 28th, not seasonally adjusted, the official number of people obtaining some sort of unemployment insurance benefit was 5,619,860 with 1,917,158 people receiving EUC, which was extended to January 2014 in the 11th fiscal cliff hour. There were 12 million official unemployed in February. .
It does appear initial claims is very slowly returning to normal levels. That said, because the job market is still so poor, we see nothing on the horizon to show initial unemployment claisms will return to 2007 levels soon. The initial claims moving average decline does look real and it's certainly better news than has been seen in a long time. Yet, celebrating initial unemployment claims that are still as early recession levels is pre-mature, especially with so many still without a job.