This is not good news.
In the week ending April 7, the advance figure for seasonally adjusted initial claims was 380,000, an increase of 13,000 from the previous week’s revised figure of 367,000. The 4-week moving average was 368,500, an increase of 4,250 from the previous week’s revised average of 364,250.
Generally speaking, when initial claims are around 375,000 it means employment is staying flat. Claims above 375,000 means unemployment is increasing and fewer initial claims means unemployment is going down.
Normally 5,000 claims above that benchmark would not necessarily be cause for alarm, but combined with this month’s anemic jobs report released last Friday, it’s not a good sign. It should be noted, however, that the 4-week moving average is still at 368,500 and most consider the 4-week average a better metric because it smooths out volatility. Still, the economy remains in a pretty big employment hole and we need much higher job growth to turn things around.
I made a similar post to this (with much better news) about two weeks ago, and it created a bit of an argument with some conservative friends about the use of these jobs numbers to measure unemployment. Their argument boiled down to saying that the only reason that jobless claims were decreasing is because people had stopped looking for work, and that extrapolating unemployment numbers from decreased jobless claims was like a hospital claiming to have cured cancer because all the patients have died.
I’m not making this up.
Anyway, I’m guessing those conservatives will now point to this report as proof that ZOMG OBUMMER SUX SO BAD LOL, even though it is using the same methodology as the previous report which they deemed completely meaningless.
One of my conservative friends took umbrage at my tone in dismissing his analogy about the hospital with the dead patients and said my insults were evidence that I had lost the argument. I patiently explained that I was only insulting him because his argument was really really stupid.
Anyway, for those conservatives and anyone else who is wondering, here’s the basic methodology behind using jobless claims to estimate unemployment numbers. In an economy that consists of 158 million people in its workforce, no matter how badly or how well the economy is doing, you can expect a certain amount of layoffs/firings. Some of those newly unemployed people will find work immediately and never make a claim; some won’t. When the economy is doing well, less people will make a claim; when it is doing poorly, more people will make a claim. This is not rocket science.
Using jobless claims to estimate unemployment is one of four methodologies used, and it is only the third most accurate of the four. The most accurate is sampling, or polling, and that is the method used by the monthly jobs report. Still, dismissing the reports completely because they do or do not align with some gut feeling that people might have about the current unemployment rate is, yes, stupid.
In case there is any confusion, go back and read the About page for this blog. Balance, for the sake of balance, has never been and will never be a goal of this blog. I’m going to continue quoting statistics from the Labor Department and other agencies and accepted experts, for good or for bad. I don’t feel the need to provide opinions from conservatives who clearly don’t understand (or are pretending not to understand) how statistics and sampling work for balance.