Initial weekly unemployment claims dropped to 420,000 this week. To combat the never ending press buzz that this means something good, let's look at the details. Initial weekly unemployment claims is a volatile number, subject to revisions.
From the jobless claims report:
In the week ending Dec. 11, the advance figure for seasonally adjusted initial claims was 420,000, a decrease of 3,000 from the previous week's revised figure of 423,000. The 4-week moving average was 422,750, a decrease of 5,250 from the previous week's revised average of 428,000.
That said, this is the release from the previous week, not revised:
In the week ending Dec. 4, the advance figure for seasonally adjusted initial claims was 421,000, a decrease of 17,000 from the previous week's revised figure of 438,000. The 4-week moving average was 427,500, a decrease of 4,000 from the previous week's revised average of 431,500.
As one can see, last week's numbers were revised +2,000, comparing the previous week numbers to this advance, one gets a headline buzz of an 3,000 drop. Yet comparing advance reports, without revisions, the drop is 1,000.
Every week, the previous weekly initial unemployment claims is revised and it's always revised to an increase. That's not a paranoid BLS conspiracy, it is because the numbers of initial unemployment reports from states dribbles in.
A better number is the 4 week average, which is now at 422,750. That said, the 4 week average is also revised continually.
Comparing revised numbers to an advance reported number, isn't statistically fair. The numbers are late, so every week, one gets a feeling initial unemployment claims is dropping, yet it is deceptive, due to the delay of the reports from States.
Below is the mathematical log of initial weekly unemployment claims, so one can get a better sense of the rise and fall of the numbers. A log helps remove some statistical noise, it's kind of an averaging. As we can see we have a step rise during the height of the recession, but then a leveling, not a similar decline. We have this yo-yo bobblehead, over 400,000 every week on initial claims, never ending labor malaise.
Below is a graph of the percent change in initial weekly unemployment claims for the last year. Look at how the numbers change bobs around zero, up and down, like a yo-yo.
Below is the 4 week moving average, set to a logarithmic scale to remove even more statistical noise, for the last year. Here a trend that is certain would appear. It looks like we have a start, but keep your fingers crossed, wait and see. Again, we need this metric to drop below 400,000 and keep dropping. Numerous economists say the number is 375,000 to show job growth. We see a strong decline, but then again, hasn't everyone in America been fired by now?
Below is a 2 year view of the 4 week moving average, set to a log scale.
More people collected the extended, or emergency unemployment insurance. Since we know people are dropping off of the rolls, this is the next wave in the long term unemployed.
States reported 3,854,067 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending Nov. 27, an increase of 142,931 from the prior week. There were 4,218,262 claimants in the comparable week in 2009. EUC weekly claims include first, second, third, and fourth tier activity.