Thursday, December 20, 2012

Sandy still affecting initial jobless claims - and Leading Indicators too

- by New Deal democrat

I've pointed out we can reasonably calculate Sandy's affect on initial jobless claims by backing out NY and NJ, comparing claims in those states to what they were a year ago as well as a month before Sandy, and using the unadjusted numbers from the remaining 48 states to calculate what the overall number would have been had Sandy not occurred. I updated that last week as to the claims from the week ending December 1.

While I can't make any statements about today's initial jobless claims number, we now have the state by state data for last week's number, and that shows that NY and NJ still had significantly elevated claims compared with the same week one year ago. Specifically, for the week ending December 8, NY and NJ claims made up 10.6% of all claims, compared with 8.9% in the month before Sandy, and 9.3% in the same week one year ago.

Calculating the effect ex-Sandy from the other 48 states, it appears that last week initial claims would have initially been reported at 337,000 rather than 343,000. The 4 week moving average would have been 361,000, the lowest since the onset of the last recession at the end of 2007.

I'll continue to report on this until NY and NJ claims return to their normal range.

Because initial claims are a component of LEI, the dramatic increase in claims after Sandy severely impacted that index, contributing -0.35 to their ultimate -0.2 result. Had Sandy not impacted those claims, the LEI probably would have come in at +0.1. Of course, the steep decline in initial claims will presumably contribute just as positively to the LEI next month.