First Time Jobless Claims

The Christmas-like anticipation of tomorrow's Employment Situation report continues, fueled by First Time Jobless Claims.

 

Last week, as you no doubt recall, the jobless claims news was full of crushing despair. Initial claims for the week ending 4/23 were reported at an expectations-missing 429,000, with unadjusted claims coming in at 385,622.  The advance number for seasonally adjusted insured unemployment comes in at 3,641,000, and the total number of people claiming benefits in all programs came in at 8,187,232.

 

For the week ending 4/30, the Econoday-surveyed analysts are going to try for another round of optimism.  They're calling for "only" 410,000 new claims (although the consensus range calls for anywhere from 400k to 450k).  And how did we do?  Let's look at the report.

 

Turning to the US Department of Labor's Unemployment Insurance Weekly Claims Report we see that....

 

....that...

 

...wow.

 

Before I reveal the numbers, let me just say that the information presented is fairly graphic.  Small children and sensitive individuals should probably go on to another metric now.

 

Ready?

 

The initial claims for the week ending 4/23 were revised upwards to 431,000.  For the week ending 4/30, the initial claims figure comes in at 474,000.  Yes, that is correct.  We missed expectations by 64,000.  The unadjusted initial claims come in at 412,873 (up 27,251 from last week), and the total number of people claiming benefits in all programs was 8,014,919 (a decrease of 171,547 from the prior week[1]).

 

So, yeah.  Ouch.

 

In honor of the employment situation report tomorrow, let's step back and have a look at April.  Here's the raw data:

 

Week ending	Adjusted Initial Claims	Unadjusted Initial Claims	Total Number Claiming Benefits
4/30	474,000	412,873	8,041,919
4/23	431,000	385,622	8,187,232
4/16	404,000	380,668	8,229,810
4/9	416,000	443,503	8,517,545

 

For the month, the total number of seasonally adjusted initial claims was 1,725,000 and the total number of unadjusted initial claims was 1,622,666.  During the month, the total number of people claiming benefits in all programs shrank from 8,517,545 to 8,041,919, a decrease of 475,626.  That "total number of people claiming benefits in all programs" category is unadjusted numbers, so we'll be working with the unadjusted initial claims figures for the rest of this.

 

At the start of the month, there were 8,517,545 people claiming benefits in all programs.  Over the course of the month, an additional 1,179,163 people started claiming benefits (we're assuming that the unadjusted initial claims for 4/9 are already factored in to the 4/9 total number).  As a result, if nothing else changed, that would put the total number of people claiming benefits in all programs at 9,696,708 in the week ending 4/30.  Since the actual number of persons claiming benefits in all programs is only 8,041,919, that means that 1,654,789 people stopped claiming benefits.

 

Now,in a teaser for tomorrow, the Econoday-surveyed analysts are expecting to see 185,000 new jobs added to the economy in April.  Assuming that figure is correct, that means that a maximum of 15.7% of the people who stopped claiming unemployment benefits in April did so because they returned to work[2].  The rest?  Well, there are a variety of reasons why they may not be claiming unemployment - returning to school, leaving the country to look for work elsewhere, death, and so on - but the most common reason is probably "exhausting benefits".

 

So, as you can see, there is a reason why the Fed remains concerned about the employment situation.

 

[1]  If you recall the calculations from last week, we estimated that an average week adds roughly 50,000 new jobs.  Using that figure again - and tomorrow will allow us to refine these calculations - only 29% of that decline can be attributed to employment.  That means that roughly 121,000 people ran out of benefits.

[2]  A maximum?  Yes.  Not all new jobs are claimed by people who were drawing unemployment benefits.  They can also be claimed by people entering the work force for the first time (such as immigrants and young adults) or by people returning to the work force who were not drawing unemployment benefits (such as retired people, stay at home parents returning to work, and people who had exhausted their benefits).  The 15.7% figure assumes that every one of those anticipated 185,000 new jobs were claimed by someone who had been drawing unemployment benefits.