'Tis the Season

This morning’s weekly report on claims for unemployment insurance benefits was greeted by the financial media with something like horror, though the stock market seems to have shrugged it off successfully by midday. Once again, however, the reported numbers are highly misleading.

The news tickers and financial correspondents are, as usual, reporting the Labor Department’s headline number: 542,000 initial filings for benefits, up from 516,000 the previous week and the highest level since 1992. Pretty shocking stuff, if it were real. Here’s a chart (click to enlarge, right-click to open in its own window) showing the true situation:



The headline number is of course the “seasonally adjusted” figure for initial claims. What the chart shows, in contrast, is the actual number of filings this year to date compared with last year and the average going back to 1967. And the actual number of filings, 511,941, was down in the latest week, not up.

That’s not to say that the employment situation is rosy. The latest number is in fact the second-highest for the corresponding week since record-keeping began; the highest was in 1982. And the total is 58 percent above the corresponding week last year, which, as the chart shows, was actually a little below the long-term average. But there’s no surprise here; the unadjusted figures this year have been running sharply higher than last year since February (with one week in July marking an exception).

Adding in continued claims, which are reported a week later than initial claims, the situation looks pretty bad:



The latest number for this series is 53 percent above the same week last year and, like the initial claims number, is the second-highest on record for the corresponding week, with 1982 marking the peak. And again, filings this year have steeply outpaced last year for pretty much the whole year, so I’m having a little trouble understanding why this is all such a shock to the talking heads on TV.

In both charts, this year’s filings have been following the long-term seasonal pattern quite closely but at an exceptionally high level. If the numbers continue that pattern, it’s not good news for workers, because the seasonal tendency is for layoffs to increase sharply until mid-January. Given the effect the economic slowdown is already having on retailers, car dealers and just about everyone else, it’s not good news for anyone.