The latest data released on Wednesday, November 24, 2010 by the Department of Labor paints two different pictures. The report begins with the seasonally adjusted data as follows:
In the week ending Nov. 20, the advance figure for seasonally adjusted initial claims was 407,000, a decrease of 34,000 from the previous week’s revised figure of 441,000. The 4-week moving average was 436,000, a decrease of 7,500 from the previous week’s revised average of 443,500.
If one were to stop here, things would seem to be looking up when viewing seasonally adjusted data alone, but one simple click on the report to display additional data shows something entirely different. When viewing the full report, the unadjusted number of new claims appears significantly worse than the seasonally adjusted numbers:
The advance number of actual initial claims under state programs, unadjusted, totaled 462,027 in the week ending Nov. 20, an increase of 52,490 from the previous week.
So what is really happening? One needs to review a larger data set to get a better idea. While reviewing the reports for the last 4 weeks, unadjusted new claims totaled 1,738,751 for a 4 week average of 434,688; a number very close to the seasonally adjusted 4 week moving average of 436,000. This indicates that the use of the calculated total for unadjusted new claims is practical. In a “normal” economy, the expected amount of new claims is roughly 300,000-325,000 new claims a week for an average of 1.25 million for a 4 week period.
The difference between “normal” and actual is 488,751 additional new claims, or stated differently, an increase of 39.1% above the normal rate of new claims. Most everyone would like to get a 39% increase in pay, but getting a 39% increase in new unemployment claims is demoralizing to say the least.
With overall unemployment still hovering at 9.6% for the last three months consecutively and a protracted recession that has created upwards of 6 million 99ers that are essentially off of the unemployment roles, it is unreasonable to expect that the unemployed will find jobs in this economic state. Many arguments have been put forth for the need for unemployment compensation extensions and the need for an additional Tier V extension, but nothing is more convincing that the cold hard facts.