1st Time Unemployment Claims and Continued Claims Fall Again

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 229,000 1st time claims for unemployment insurance for the week ended October 26, DOWN 5,000 from the prior week;
  • The number of initial claims for the week ended October 19 was revised UP 1,000 to 234,000;
  • The four-week moving average of first time claims DROPPED 7,259 to 232,500, the fifth straight weekly decline;
  • Four week moving average represented 0.152 percent of employment, down from 0.156 percent one week earlier;
  • The number of continued claims – reported on a one-week lag – for the week ended October 12 was 1,884,000, DOWN 15,000 from the previous week and the lowest since December 29, 1973 when it was 1,805,000;
  • The four-week moving average of continuing claims DROPPED 3,250 to 1,895,750 – the 11th decline in the last 12 weeks.

Image result for unemployment insurance claims

On the eve of a critical employment situation report, the Department of Labor reported Thursday yet another decline in first time claims for unemployment insurance. While the report will have no impact on Friday’s employment report for October, it does show a continuing positive trend with declining layoffs and improved hiring.

What remains to be seen is whether workers will benefit from the tighter labor market with higher wages.

The claims report – and its implications – could raise concerns about one of the “benefits” of the tax revision proposal in Congress which has, as one of its aims, increasing jobs. With the nation’s economy approaching “full employment,” an elusive ill-defined term, arguing for a tax cut to create jobs relies on specious reasoning.

It harkens back to President George W. Bush’s rationale for a tax cut when he took office in 2001, Initially, he argued, the tax cut was necessary to return the government surplus to taxpayers. When the surplus became a deficit, he argued the tax cut was needed as an economic stimulus.

Jobs don’t seem to be the issue today with economists forecasting the Bureau of Labor Statistics’ (BLS) Employment Situation report could show a gain of perhaps 300,000 payroll jobs in October, bouncing back from the loss of 33,000 jobs in September. The BLS is likely to report a revision to the September numbers. The BLS has revised September payrolls higher in all eight years of the current recovery and expansion, by as little as 3,000 in 2015 and as much as 124,000 in 2009. The average upward revision has been 53,000 which would turn September’s job loss into a gain. In the two other years for which a jobs loss was initially reported – 2009 (down 263,000) and 2010 (down 95,000), the revisions merely cut to jobs loss (to 133,000 in 2009 and 24,000 in 2010).

What seems remarkable but flies under the radar in analyses of the report on first time claims is how small a percentage of employment the number of claims is. As awful as it may sound for those affected, the nation needs a little unemployment to allow businesses to start up or expand.

You can hear Mark Lieberman every Friday at 6:20 am on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

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