Thursday, October 22, 2020

Jobless claims: a very positive reversal


 - by New Deal democrat

This week’s new jobless claims report not only reversed last week’s increase, but declined below 800,000 for the first time on an *un*revised basis. I say that because revisions from two weeks ago now have that week as the lowest since the pandemic struck.  [NOTE: California has restarted reporting its claims, and has also reported for the past two weeks, and is the likely cause of the big revisions - generally downward, or positive.]

On a non-seasonally adjusted basis, new jobless claims declined by 73,125 to 756,617. This would be a new low, except two weeks ago was revised down to 731,249. After seasonal adjustment (which is far less important than usual at this time), claims declined by 55,000 to 787,000. This would be a new low as well, except two weeks ago was revised down to 767,000. The 4 week moving average also decreased by 21,500 to 811,250, a new pandemic low: 

Here is a close-up of the last three months since the end of July highlighting the overall slow progress in initial claims since then:

Continuing claims (which lag initial claims typically by a few weeks to several months) on a non-adjusted basis declined by 2,238,268 to 7,992,238. With seasonal adjustment they declined by 2,221,000 to 8,373,000. Both of these are new pandemic lows:

Continuing claims are now about 2/3’s below their worst level from the beginning of May, but are still about 1.5 to 2 million higher than their worst levels during the Great Recession.

Last week I noted my concern for the big weekly increase in claims, while cautioning that it was “only one week’s data.” This week’s big reversal explains that caution.

Overall the situation with layoffs has continued to improve at a very slow pace. This is of a piece with the same slow continued improvement in most of the “weekly indicators” I update each Saturday. At the same time, we are still at the mercy of the pandemic, and there are new indications that it is about to worsen again with the onset of cold weather and people retreating indoors.