For Second Week in a Row, Press Says 'Jobless Claims Fall to 5-Year Low' as Actual Ye

[Wehrwolfen]

For Second Week in a Row, Press Says 'Jobless Claims Fall to 5-Year Low' as Actual Year-Over-Year Claims Rose​

By Tom Blumer
January 24, 2013

For the second week in a row, actual (i.e., not seasonally adjusted) unemployment claims as reported by the Department of Labor came in greater than the analogous week in 2012.

At the same time, and also for the second week in a row, the department's seasonally adjusted claims number -- the only one the business wire services ever specifically identify in their reports -- came in lower. In today's instance, raw year-over-year claims were almost 5 percent higher than the same week a year ago, but the year-over-year seasonally adjusted figure came in 11 percent lower. That's bad enough, but then the wires compounded the problem by running with indefensible conclusions based on DOL's contradictory data.


The following graphics demonstrate the contradiction. First, here's last week (issued on January 17 for the week ended January 12):

Both weeks had five buisness days, so it's hard to understand why DOL used very different seasonal adjustment factors in the two years. If DOL had used the same factor in 2013 as it did in 2012 (1.442 instead of the 1.660 it used), seasonally adjusted claims would have come in at a radically higher 385,000 instead of the reported 335,000 (555,708 divided by 1.442, rounded).

Now here's today's related graphic for the week ended Janary 19:

In this case, if DOL had used the same factor in 2013 as it did in 2012 (1.120 instead of the 1.323 it used), seasonally adjusted claims would have come in at 393,000 instead of the reported 330,000 (555,708 divided by 1.442, rounded), or 63,000 claims (19 percent) higher.

There is some justification for treating the most recent week differently than the comparable week a year ago, because the same week last year included the Martin Luther King holiday. But I don't believe that comes anywhere near justifying the entire 63,000-claim difference.

Let's see how the three major business wires covered the results (bolds are mine):

Associated Press, Christopher Rugaber ("US JOBLESS CLAIMS DROP TO 5-YEAR LOW OF 330,000")
The number of Americans seeking unemployment aid fell last week to the lowest level in five years, evidence that employers are cutting fewer jobs and may step up hiring.

The Labor Department said Thursday that weekly unemployment benefit applications dropped 5,000 to a seasonally adjusted 330,000. That's the fewest since January 2008.

The four-week average, a less volatile measure, fell to 351,750. That's also the lowest in nearly five years.

Bloomberg, Lorraine Woellert ("Jobless Claims in U.S. Decrease, Prolonging Seasonal Swings")

Claims for jobless benefits in the U.S. unexpectedly dropped last week to a five-year low, highlighting the challenges in adjusting the data for swings at the start of a year.

... Initial jobless claims reflect weekly firings and tend to fall as job growth accelerates.

Reuters, unbylined ("Jobless claims drop to five-year low")

The number of Americans filing new claims for unemployment benefits unexpectedly fell to its lowest since the early days of the 2007-09 recession, a hopeful sign for the sluggish labor market.​

The fact is that year-over-year claims came in higher for the second week in a row -- the first time that has happened since October 2009. Because claims have really been higher, it seems fair to turn each of the three reported cited above around:

• AP -- The rise in year-over-year claims means that employers are really cutting more jobs, not fewer, than a year ago, signaling that they may also be reducing hiring.
• Bloomberg -- The rise in year-over-year claims indicates that job growth may well be declining.
• Reuters -- The rise in year-over-year claims may be a bearish sign for the sluggish labor market.​

Read more:
For Second Week in a Row, Press Says 'Jobless Claims Fall to 5-Year Low' as Actual Year-Over-Year Claims Rose | NewsBusters

 

[Vast LWC]

How dare the press help people feel confident in the economy, by reporting numbers.

How dare they.

After all, consumer confidence will help make the economy continue to grow! And then where will we be?

 

[pinqy]

The following graphics demonstrate the contradiction. First, here's last week (issued on January 17 for the week ended January 12):

Both weeks had five buisness days, so it's hard to understand why DOL used very different seasonal adjustment factors in the two years. If DOL had used the same factor in 2013 as it did in 2012 (1.442 instead of the 1.660 it used), seasonally adjusted claims would have come in at a radically higher 385,000 instead of the reported 335,000 (555,708 divided by 1.442, rounded).

No, it's not hard to understand. The weeks were on different days (ending Jan 14th for 2012 and the 12th for 2013) and the adjustments around were different. In 2012 the seasonal factor for the week ending Jan 7 was 165.9 and for Jan 14th 144.2. In 2013 the factor for the week ending Jan 5 was 148.6 and for Jan 12th 166.0
The factors aren't made arbitrarily...they're from a complex computer program and are published well in advance. The seasonal factors are currently available for the weeks up to April 6.

No, seasonal adjustment is not perfect, but if you look at the graph for the last 6 years, the adjustment smooths out the trends.

 

[Stephanie]

How dare the press help people feel confident in the economy, by reporting numbers.

How dare they.

After all, consumer confidence will help make the economy continue to grow! And then where will we be?

well yeah, just report stuff that isn't true, that is how it's done today under this administation
go back and see how they reported unemployment under Bush

 

[Stephanie]

They don't report today, they spin fairy tales

I guess they have to so the people aren't reminded we are still at ALMOST 8%unemployment under this administration

 

[pinqy]

How dare the press help people feel confident in the economy, by reporting numbers.

How dare they.

After all, consumer confidence will help make the economy continue to grow! And then where will we be?

well yeah, just report stuff that isn't true, that is how it's done today under this administation
go back and see how they reported unemployment under Bush

Nothing has changed. The only change in methodology for the Current Population Survey (which gives the UE rate) was that before 2011, when entering duration of unemployment, the max allowable entry was 2 years (anything over 2 years was recorded as 2 years so in effect, "2 years" was "2 or more years."). Since 2011, the max entry is 5 years.

This had zero effect on the UE rate or the median duration of unemployment. The only thing that changed was the mean duration.

 

[pinqy]

They don't report today, they spin fairy tales

I would love to see your evidence for any changes in methodology/reporting that make current data incorrect.

You don't have any of course...what you have is partially understood info from blogs/conspiracy theorists that themselves misunderstand or misrepresent what actually happens.

 

[SniperFire]

It is done to give the Obama lapdog media a headline.

Of course, the revisions are not mentioned when they happen.

 

[pinqy]

It is done to give the Obama lapdog media a headline.

No, the headlines are the media's own. The reports themselves will never say anything like "lowest in X years etc. DOL (for UI claims) and BLS just report the facts.

Of course, the revisions are not mentioned when they happen.

Again, that's the media. The revisions are documented and available from the agencies.