Seasonal Adjustment Brings Big Drop In Initial Jobless Claims

I’m sure the Democrats and their pals in the media will be touting this week’s initial jobless claims data as great economic news.

The number of Americans filing first-time claims for unemployment insurance payments fell more than forecast last week to the lowest level in five years, pointing to further improvement in the labor market.

Applications for jobless benefits decreased by 37,000 to 335,000 in the week ended Jan. 12, the lowest level since the period ended Jan. 19, 2008, Labor Department figures showed today. Economists forecast 369,000 claims, according to the median estimate in a Bloomberg survey. A spokesman for the agency said the figure may reflect challenges adjusting the data for the pickup in claims that typically occurs in early January.

Only in this “new normal” economy do we celebrate initial jobless numbers coming in in the 330’s.

In the unadjusted data, things look very different – with a lag, New York (37,189), Georgia (15,354), and North Carolina (13,606) saw major rises in initial claims with only Michigan (-12,536) seeing a decent drop in claims – as we note that non-seasonally-adjusted claims rose notably less than in the prior 4 years, and assuming seasonal-adjustments are triggered from those, this will reflect very rosily on today’s seasonal adjustment. With Claims back to ‘normal’, what will the Fed do?

Not to worry. No doubt the number will be revised upward in the next few days and the Fed will continue on its disastrous path.