1st-time Unemployment Insurance Claims Dip but Remain at Elevated Level

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 228,000 1st time claims for unemployment insurance for the week ended April 27, DOWN 2,000 from the previous week’s unrevised 230,000
  • The four-week moving average of first-time claims ROSE 5,750 to 220,250;
  • Four week moving average represented 0.146 percent of employment, UP from 0.141 percent the previous week;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,684,000 for the week ended April 20, UP 13,000 from the previous week’s UNREVISED 1,671,000;
  • The four-week moving average of continued claims DROPPED 8,000 to 1,665,750.

Trends:

  • The year-to-date average of 1st-time claims for unemployment rose 2.3 percent from the previous week but remains down year-year;
  • The four-week moving average of initial claims rose for the third week in a row for the first time since January;
  • The four-week moving average of continuing claims fell for the seventh straight week – for the first time since last August to October — to the lowest level of the year

Data Source: Department of Labor

Image result for unemployment

It says something about the state of the economy when eyebrows are raised as the tally of weekly initial employment insurance claims hovers around 230,000. At the height(depth) of the Great Recession ten years ago we probably would have sacrificed just about anything for claims at the 230,000 level. Claims at the time, the week ended May 9, 2009, were 659,000.

Another example of looking at data in context.

That said, it is difficult to ignore the recent sharp increase in first-time claims to what might be a new norm. Just three weeks ago, the number of filings hit a 50-year low of 193,000 but jumped 19.2 percent the following week, the largest week-week increase since the 25.2 percent jump in September 2017 due to hurricane Irma. (Indeed, according to the National Weather Service, September 2017 was the most active month of any Atlantic hurricane season on record. In that month, Hurricanes Irma and Maria achieved category 6=5 status and Hurricane Jose was a category 4 storm.

There were no hurricanes to mar the labor landscape and contribute to the recent sharp increase in unemployment insurance claims. In context, 230,000 claims is not a large negative number (except for those personally affected). With last week’s Employment Situation report showing a 50-year low unemployment rate, the labor picture remains positive.

While there’s been White House pressure on the Federal Open Market Committee to alter course and lower the target fed funds rate, the employment situation report suggested the FOMC should at a minimum hold the line. According to the BLS, weekly earnings rose at a 2.9 percent annual rate in April and the increase in weekly wages has averaged 3.2 percent this year, exceeding the rate of inflation. Wages going up faster than prices would fuel demand and itself send prices higher resulting in, you guessed it, inflation, one of the evils the FOMC is supposed to guard against.

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

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