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  • What Caused Drop in Unemployment Insurance Claims?

    The news that new Unemployment Insurance (UI) claims dropped sharply to 339,000 last week has raised eyebrows—and aroused suspicion the Department of Labor had massaged the numbers. In truth, there is both more and less to this story than meets the eye. The numbers are incomplete, but because of bureaucratic incompetence, not a grand conspiracy.

    The Department of Labor releases information each week on the number of Americans newly filing for UI benefits. These figures shed light on the state of the economy: anything above 400,000 indicates recession territory, while figures below 330,000 show strong economic growth. Since the start of the year around 370,000 Americans have filed for benefits each week—below recessionary levels but still weak. The reported drop would indicate a sharp improvement in the job market.

    Except it does not. As the Department of Labor has explained, today’s figures are incomplete. One large state (identified elsewhere as California) did not get all their numbers into the Labor Department on time.

    More precisely, at the start of each quarter many people must re-apply for UI benefits. The Labor Department knows this happens and “seasonally adjusts” the data downward to remove this effect—many new applicants are not really “new.” California, however, failed to report the number of workers reapplying for benefits. As a result the seasonal adjustment factor overcompensated. The reported drop came from fewer-than-expected people reapplying for UI benefits because California messed up— not fewer people getting laid off.

    Next week this process will reverse. Normally new UI claims drop sharply the week following a new quarter. Seasonal adjustments adjusts the figures upward to counteract this. Next week the new claims will not fall as much as they normally do, which will cause the number of seasonally adjusted claims to jump.

    Neither this week’s large drop nor next week’s impending jump in UI claims say anything about the state of the economy. They only show that large government bureaucracy’s often cannot get their act together.

    Posted in Economics [slideshow_deploy]

    5 Responses to What Caused Drop in Unemployment Insurance Claims?

    1. Bobbie says:

      We have to get this party out of America's house. Everything democrats do is never what it appears and unwilling to take accountability. Democrats and those protecting them can spin and twist anything dumping their extreme consequences on people without batting an eye confusing their own constituents and all America!! This country can't function with that! We need strong leadership that's TRUTHFUL!!!!! HONEST!!!! AND SINCERE!!!! Democratic followers can't recognize a lie when it's become inherent in the minds of democratic officials! They need prayers!!!

      Can't get over the negligence in safety and protection of our American Ambassador and his colleagues in the most dangerous part of the world!! DEPLORABLY HORRIFIC! There is absolutely no EXCUSE!!!! It is their job to protect Americans where funding is obligatory! There's no reason the Ambassador should have needed to ask for protection! It should've been there without question! But for democrats to lie just to cause attention to limit the freedom of speech? While they belittle the good people of Benghazi in telling us initially it was in protest against a video??They're murderers! They don't know the difference between a protest and a TERRORIST ATTACK?? Quick to jump then once again procrastinate??? NO SIGN OF URGENCY?? They're investigation is still going on???? The American democratic party is starting a war with the world using America as their tool!! Democrats are liars with extreme tendencies to promote their lies to snuff truth out!!!!!

      The no accountability party who WON'T tell or face the truth, has got to GO!!! America deserves dignity these people show none of!!

    2. Maybelline says:

      This is an excellent, understandable explanation that needs to go viral.

    3. Sandra Hopes says:

      Conveniently the month before an election. Go figure.

    4. Tommy Thomas says:

      7.8% unemployment? Without the largest state reporting their numbers? Just weeks before a National election?

    5. Linda Lucile says:

      do we have some way to keep track of humans whose UIC Benefits expire.. however, those guys and gals are still searching for employment?
      Due to this 'anomaly' existing, the general covariances of expectations in the above mentioned data aren't really as accurate as we would like them to be, whether or not a state makes a certain deadline for stats getting to the bls folks!
      (In other words, we have a whole nuther-other scenario of existence that hasn't even been touched…..almost as tho we are afraid to recognize its existence. If such fear dominated ALL our work on earth, we would never have had smallpox variolations in the first 1000 years of modern day calendar count. Neither would we have had innoculations and vaccinations or antibiotics in the 1900's of modern day. We need more courage to set matters straight. Then the answers we seek might be more easily found!!

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