Unemployment Insurance Claims Still At Good-Times Levels As Seasonal Adjustments Get Fixed

Labor market that’s less tight, where it takes a little longer to find a new job, similar to the Good Times before the pandemic.

A big hullaballoo erupted on Thursday when the Labor Department released the weekly initial claims for unemployment insurance with heavily revised seasonal adjustments for prior data. The pandemic wreaked havoc on seasonality across the economy, from retail sales to housing, including the labor market, and seasonal adjustments to correct for seasonality went awry all over the place.

Back in the spring of 2020, I screamed about how the horrendous unemployment claims data were being further messed up by seasonal adjustments, and in May 2020, I switched my reporting from “seasonally adjusted” to “not seasonally adjusted” unemployment insurance data. In August 2020, the Labor Department admitted that the seasonal adjustments had gone awry, and it changed its method of making those seasonal adjustments.

Compared to that mess back then, Thursday’s substantial revisions of the seasonal adjustments were relatively minor. In essence, they fixed some of the issues that resulted from changing the method of seasonal adjustments during the pandemic (Labor Department’s discussion).

The number of initial claims for unemployment insurance that people filed in the latest reporting week with state unemployment offices fell by 18,000 to 228,000 initial claims, the Labor Department reported on Thursday. This was down from the previous week’s claims of 246,000.

But the previous week was revised up on Thursday from the previously reported 198,000 claims. The chart of the 4-week moving average shows that initial claims for unemployment insurance, after the revisions, are at the edge of the high end of the Good Times before the pandemic, rather than inside the high end, where they had been before the revisions:

In the historic context, unemployment claims remain at the low end of the past 50 years:

The number of people who are still claiming unemployment insurance at least one week after the initial application – people who haven’t found another job yet – rose to 1.83 million, the highest since December 2021, according to the Labor Department on Thursday.

They’re now off their historic lows from last year. But they’re still at the low end of the 50-year range, and back in the range of the Good Times in the years before the pandemic.

Recessions from the Great Recession back through the Double-Dip recession in the early 1980s began when continued unemployment claims spiked through about the 2.5-million mark:

This increase in continued claims for unemployment insurance shows that it now takes a little longer to find a job after having filed for unemployment insurance, and that the number of people on unemployment insurance is increasing off the historic lows last year.

So what we’re seeing in these unemployment insurance data is a labor market that is getting less tight, where it takes a little longer to find a new job, similar to the Good Times levels of unemployment insurance claims.

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