Thursday, October 12, 2017

Hurricane adjusted initial claims for the week of September 30: 243,000

 - by New Deal democrat

I am repeating an exercise I undertook in 2012 when Superstorm Sandy disrupted the initial claims data: estimating what the initial jobless claims would have been, but for the hurricanes.  Since this morning initial claims for the first week of October were reported at 243,000, this will probably be the last week in which this exercize is necessary.

In 2012, I created the hurricane adjustment by backing out the affected states (NY and NJ) from the non-seasonally adjusted data, which gave me the number of initial claims filed in the other 48 states.  I compared that with the same metric one year earlier, and multiplied by the seasonal adjustment to arrive at the number if the affected states had the same relative number of claims during the given week, as all of the unaffected states.

This tells us whether or not the hurricane disruptions are masking any underlying weakness in the economy.

This year I backed out Texas starting 4 weeks ago, added Florida 3 weeks ago, and Puerto Rico last week.

The state by state data is released with a one week delay.  So what follows is the analysis for the week of September 23, the number for which was reported at 272,000.

Here is the table for the Week of September 24 in 2016 vs. September 23 this year:

Metric                              2016                   2017
Seasonally adjusted:       248,000              258,000
Adjustment for total:       1.23                   1.26
Not seasonally adjusted: 200,456             204,662 
Florida claims:                 7,275                 18,902
Puerto Rico claims:         1,621                 328 (!)*
Texas claims:                   14,323               17,063               
NSA claims ex-FL,TX,PR:177,237           172,369
FL, TX, PR as % of total: 11.6%                   n/a
2017 w/ FL,TX, PR adjustment:  n/a          194,988

*Yes, Puerto Rico really was lower this year, presumably because offices were not open or claimants were otherwise unable to file.

In 2016 the weekly seasonal adjustment was 1.23. This year it was 1.26 Multiplying the non-seasonally adjusted total of 194,988 by 1.23 gives us 240,000. Multiplying by 1.26 gives us 246,000.

Thus the hurricane-adjusted initial jobless claims number for the week of September 23, 2017 is 243,000.

Here are the hurricane-adjusted numbers for previous four weeks:
Sept. 2:  239,000.
Sept. 9:  229,000.
Sept. 16: 237,000
Sept. 23: 246,000

The four week hurricane adjusted average is 239,500.

The underlying national trend in initial jobless claims has remained very positive during the period of hurricane disruptions. Unless the disruptions remain significant in next week's report, this will be my last hurricane-adjusted update.