Initials State Unemployment Claims
Seasonally-adjusted initial claims for the week ending October 10 rose to 898,000 from 845,000 according to the Department of Labor.
That’s the highest total since 1,011,000 on August 22.
The BLS changed its methodology for counting initial claims effective August 29. The change artificially lowered the counts for that week.
Since the BLS did not revise back, the weeks starting August 29 are distorted vs the weeks prior.
Continued State Unemployment Claims
Continued state unemployment claims lag initial claims by a week.
Continued claims are more important than initial claims. It is continued claims that determine the official unemployment rate.
The rate is set by survey on the week that contains the 13th of the month, the weeks in boxes.
Suspect Improvement
Seasonally-adjusted continued claims fell from 11,183,000 last week to 10,018,00 this week.
However, continued claims are distorted by three factors.
Continued Claims Distortions
- BLS Methodology Change on August 29.
- California is so messed up it froze reporting.
- People in some states have expired all of their state benefits and thus fell off the rolls.
California Fraud
Bloomberg Econoday has this interesting blurb last week regarding California.
California is now offline when it comes to claims data as it scrambles to limit unemployment fraud. With the weekly estimate for the US’s largest state now frozen at a prior level of more than 260,000, forecasters see total initial claims easing slightly but not substantially to 819,000 in the October 3 week.
California is still offline. I assure you fraud goes well beyond California.
Primary PUA Claims in 2020
Primary Pandemic Unemployment Assistance
Unlike state claims, PUA applies to people working part-time, gig workers, and self-employed workers who do not qualify regular state unemployment programs.
Over 11 million people receive PUA. This is where most of the fraud is hidden.
I suspect most of it is not fraud, but no one knows the real numbers due to the loosy-goosy nature of the program.
In terms of determining unemployment, I suspect that at least 2 million of those 11 million are genuinely unemployed.
All Continued Claims in 2020
Like PUA Claims, All Continued Claims are not seasonally adjusted.
They lag continued claims by a week and initial claims by 2 weeks.
Over 25 million people receive some assistance. That number, minus fraud and mistakes should feed the U6 (alternate unemployment rate).
Estimating the Unemployment Rate
The latest jobs report came out on October 2 as discussed in Job Recovery Slows and Headwinds Mount for October
The BLS says the number of unemployed is 12,580,000.
The Unemployment Rate = #unemployed / Labor Force.
UR = 12,580,000 / 160,143,000 = 7.9%
But continued claims for the reference week were 11,979,000.
PUA claims are over 11 million. Some number of them (2,000,000 to 4,000,000) are genuinely unemployed.
Even if we assume only 1 million of those 11 million are unemployed, the BLS unemployment rate is too low.
Take my low-end guess of an additional 2 million, the unemployment rate is (11,979,000 + 2,000,000) / 160,143,000 = 8.7% vs the BLS claim of 7.9%.
If we assume PUA fraud or errors at 4 million (a generous to the BLS assumption) we can make the following calculation:
The U6 Unemployment rate would be (25,290,325 – 4,000,000) / 160,143,000 = 13.3% not the reported 12.8%.
Mish
Pratt-Whitney and Collins Aerospace divisions had their layoffs on the 12th or 13th of this week, so those thousand or so people will show up in the reports a couple of weeks from now. The effects of the end of PPP are starting to show up in the initial unemployment claims report.
Michigan passed 25 bills today that transfers funds from specific purposes and turned them over to the general fund, 37.1 million total. Unemployment payments have been a real problem. Most do not know that they are running a 1.5 billion dollar budget shortfall caused by Whitmer’s illegal shut down. 37.1 is the million down payment I guess.
PEUC claims increased 818,054 to 2,778,007 on Sept 29th. That means that if they don’t find work by January the 13 weeks of benefits will be expiring and they will be on their own. They really should be added to the continued state claims for that week since the vast majority of them are people with expiring state benefits.
Those claims are in the “All continued Claims” bucket so I did count them.
Like PUA one can be “partially” unemployed. How many qualify as “not working at all” to be counted as unemployed by the BLS?
This all gets confusing but you raise a valid point.
If most of them are not working at all, then yes they should be added to continued claims.
What a mess.
We have help wanted signs at businesses around me… I never in my entire life have seen this many.
Inflation never shows in govt inflation reports no matter how much money the Fed gives to the rich and unemployment never shows up in govt reports no matter how many lose their jobs. I don’t see a problem here.
If trump wins, I’ll be happy to see him stew in the sewage he’s created. A crashed economy with an election he’s made everyone question the legitimacy of. Putin’s wet dream and trump’s nightmare.
The economy has recovered faster than anyone thought possible. I mean retail sales , home sales & car sales are all booming and the problem in all three industries is lack of supply not lack of demand .
… on the back of a 3 trillion dollar deficit / stimulus that’s already running out. If people aren’t working, it all falls apart, and people aren’t working.
Dare I ask what any of this has to do with Trump? Everything that is happening in the economy would have happened with a Democrat in the White House.
If Biden wins he is certain to face an impeachment. Trump was impeached for trying to investigate Hunter Biden which we are now finding is all true. Joe says he never new what Hunter was doing yet Hunter’s emails is asking for payment for introductions to Joe. Abuse of power, lying , and working getting paid by Russians who Biden says we should not trust. This is all too Juicy. The allegations were always out there and I was surprised Biden ran for president. I do not not if there has ever been this bad of a black eye this bad on a former Vice President and maybe soon to be president. Nobody will trust anything he says in the future.
I would not trust the Biden revelation. The store owner who claims the emails came from abandoned laptops keeps changing his story–and then somehow they ended up in the hands of Rudy Giuliani who has financial ties to the Ukraine? Give me a break.
Do you have any sources for the contents of Putin’s dreams?
“If Biden wins he is certain to face an impeachment.”
Totally ridiculous
The House brings impeachment charges.
Guess what?
Biden resigns because of health and Hunter and Kamala becomes president as planned all along. Nothing changes.
I accidentally gave you a like you don’ t deserve for talking unfounded Putin nonsense again …..
Personally I think it was crazy that Biden is running when all these smoking guns on Hunter are out there. Of course Joe knows nothing about what his only son does for a living. 😉 Not that I am a Trump fan but Biden will go soft on China and from my experience, they have stolen IP from a former tech company I worked at and they have been stealing and copying designs from a friends company.
I guess nobody cares what an executive officer family members business deals involve. I guess it is one of the perks of being in power. Anything goes. Biden looks to get elected. Hunter will set up some nice exclusive deals again in China and Russia. Probably letting them keep stealing my friends company designs.
When the long math becomes too tiresome for Mish, we will certainly understand.
In related news, BLS is changing it’s methodology for calculating CPI: it will directly survey households instead of using a fake basket of goods and services. /sarc
Surely there’s a Walmart near BLS headquarters.
I’m glad you’re willing to wade through those reports and provide some insight into what’s really going on. It’s beyond my ability to make any sense out of unemployment numbers.
So we have a problem….too bad the congress is too busy grandstanding to do anything.
A problem with what & where?? what is “really going on”??
The problem as I see it….is that the big infusion of free cash ended in July and now its October and a lot of people are unemployed and hurting….and COVID is in no way managed….as of yet.
Your assertion that the economy has recovered….is in error. Your observation about home sales, car sales, and retail sales is partially true, but it isn’t the whole story…We have a long hard row to hoe….
You didn’t really want to know what I thought, did you?
Didn’t think so.
Yet, we already have a system to deal with unemployment. Why do we need something different now, and not other times?
We don’t have a system to deal with a deflationary collapse when commerce goes to near zero. That’s what this is about, more than just helping the worst affected.
“We don’t have a system to deal with a deflationary collapse…”
Yes and no. We have a system and its called the “fair market”. The problem is, we don’t let it operate!