U.S. jobless claims tumble to three-month low

[Capt. Obvious]

Source: Reuters

The number of Americans filing new claims for unemployment benefits fell more than expected and hit a three-month low last week, a sign of strength in a labor market that has been hobbled by severe weather.

Initial claims for state unemployment benefits dropped 26,000 to a seasonally adjusted 323,000, the Labor Department said on Thursday. That was the lowest level since the end of November and the drop more than unwound the prior week's rise.

Claims for the week ended February 22 were revised to show 1,000 more applications received than previously reported.

Economists polled by Reuters had forecast first-time applications for jobless benefits falling to 338,000 in the week ended March 1.

Read more: http://www.reuters.com/article/2014/03/06/us-jobless-claims-tumble-to-three-month-idUSBREA2512820140306

[DontTreadOnMe]

1. no increase in job creation, but the unemployment numbers are going down?

I have a good deal on bridge over near the East River!

[rtracey]

2. well combination of things

Lets see..bad winter weather, less people looking for work, some people retiring, .....i can see it, whats your point?

[FloriTexan]

3. I get his point...

These jobless numbers are up one day, down the next. You really have to consider that hundreds of thousands of people were cut off from their unemployment benefits by the governement. That does not mean they stopped looking for work. It doesn't mean there are more jobs available, and it doesn't mean that is considered in these numbers. Within a week there will probably be another jobless report implying the opposite of this one.

[JoePhilly]

4. And yet UE is down from a high of 10.2% to about 6.6% now.

[DontTreadOnMe]

6. 6.6% is total bullshit number...

read my next post

[DontTreadOnMe]

5. Exactly, the "offical unemployment number" is a meaningless statistic

It doesn't show how many people are looking for jobs. It only counts people who are collecting unemployment checks. When you lose your unemployment benefits, you fall off that list. With low job creation, and more and more people lose their unemployment benefits, the situations becomes worse for people looking for jobs... but the "official unemployment number" makes it look like things are getting better.

Total deception.

[JoePhilly]

7. Its the number that has always been used.

Now that some people don't like how its been moving, clearly, we should stop using it.

And you do not fall off the list when you lose your benefits. You fall off the list when you retire, go to school, or when you stop looking.

[brentspeak]

8. CNN: "When unemployment benefits run out, jobless rate falls"

http://money.cnn.com/2012/06/01/news/economy/unemployment-benefits/index.htm

Why the unemployment rate will fall

By Tami Luhby @CNNMoney June 1, 2012: 4:26 PM ET

NEW YORK (CNNMoney) -- The unemployment rate could fall in coming months, but don't get too excited.

It won't necessarily be a sign the job market is improving.

More than a half million long-term unemployed people are losing their federal extended unemployment benefits. And when the checks stop coming, one of two things are likely to occur: They'll take any job they can get to stay afloat financially or they'll drop out of the labor force completely.

Either way, they won't be counted as unemployed anymore.

[JoePhilly]

9. Thanks. The CNN article you site actually confirms what I said.

Losing your benefits does not cause one to stop being counted as part of the workforce.

What causes one to stop being counted is taking a job, or stopping looking (CNN leaves out retiring, or going to school, which also cause you to drop out of the work force).

You'll notice CNN says ... "one of two things are likely to occur" ... see the bold word there? That's CNN speculating on what people might decide to do if they lose benefits. CNN is not saying that losing your benefits results in one being dropped from the workforce calculation.

Bottom line: Losing your benefits does not cause you to be dropped from the UE workforce calculation. Which is what I said.

[DontTreadOnMe]

10. JoePhilly.. you are 100% wrong

how does the government "know" you are still looking for a job?

Go research EXACTLY HOW the UE workforce is calculated?

Then go do research and find out what the REAL unemployment estimate figures are...

[DCBob]

12. I think you are 100% confused..

From BLS..

Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Actively looking for work may consist of any of the following activities:

Contacting:
An employer directly or having a job interview
A public or private employment agency
Friends or relatives
A school or university employment center

Sending out resumes or filling out applications
Placing or answering advertisements
Checking union or professional registers
Some other means of active job search

Passive methods of job search do not have the potential to result in a job offer and therefore do not qualify as active job search methods. Examples of passive methods include attending a job training program or course, or merely reading about job openings that are posted in newspapers or on the Internet.

Workers expecting to be recalled from temporary layoff are counted as unemployed, whether or not they have engaged in a specific jobseeking activity. In all other cases, the individual must have been engaged in at least one active job search activity in the 4 weeks preceding the interview and be available for work (except for temporary illness).

The questions used in the interviews are carefully designed to elicit the most accurate picture of each person's labor force activities.

more: http://www.bls.gov/cps/cps_htgm.htm#unemployed

[JoePhilly]

14. Its a survey ... they ASK people. You are the one who needs to go do some research.

I know how it works ... you however, are totally confused.

They don't not stop counting you as part of the workforce, when calculating UE, when your benefits run out.

That's not how its done, and that's why the CNN article you referenced doesn't say that.

If they did, they'd be just as wrong as you are.

[FloriTexan]

16. Who do they survey?

No one has ever surveyed my long-term unemployed husband. Do they just call republicans or something? Seriously, he and I would both be glad if someone called him and gave a damn.

[JoePhilly]

19. Well ... if they don't call you, clearly it must not happen.

Actually, no.

If you want to know exactly how they do they survey, and for how long they have been doing it (heck, I'll give you the 2nd part for free, its a monthly survey that they they've done every month, since the 1940s), here is the government's description of how they do it.

http://www.bls.gov/cps/cps_htgm.htm#where

Google is your friend.

[DCBob]

22. Its a survey.. they just call a representative nationwide subsample.

Of course they don't call everyone.

[DontTreadOnMe]

11. "Its the number that has always been used."

oh.. OK. Then I should believe the number is true!

HINT: It's a "fake" number.. it tracks how many people are collecting unemployment benefits... not how many people are unemployed.

If we really want to understand the health of the labor market, it’d be best to focus on employment and unemployment of the working-age population, 25 to 65, and leave millions of teenagers and octogenarians out of the equation.

Unfortunately, this data isn’t published by the government in the monthly employment report, and it isn’t seasonally adjusted, so it’s harder to analyze. But it is available on the Bureau of Labor Statistics website.

For example:
In 2012, the participation rate for the working-age population was 77.5%, down about three percentage points from the peak of 80.2% in 1997. Find the data yourself.

It means that the vast majority of working-age adults, men and women, are working or looking for work. But it also means that many millions have given up hope of finding a job. Some of them will never work again.

If the participation rate were where it was in 2007, about 3 million more working-age adults would be in the labor force, and the unemployment rate for that group would be about 9%, instead of 6.8% as "officially reported.

That means that the “real” unemployment rate is about two percentage points higher than the official rate. If we understood that, we might be trying to do more to create jobs.

Long-term unemployment is our country’s biggest problem, and if we don’t do something quick, it’ll cause permanent damage to our economy, and ruin the lives of millions of people.

[whatthehey]

13. UE surveys are not based on benefits at all

These are large surveys, done by completely different department to the one responsible for benefits. Two questions asked to those who report not having a job matter for this discussion:

1) Have you meaningfully looked for a job even once in the last 4 weeks? Y = included in u3 headline rate. N= next question.

2) Have you meaningfully looked for a job in the last 12 months? Y = included in u6 rate that is also declining rapidly N = not in the labor force.

These seem right to me. If you haven't bothered looking even once in a full year, by what standard should you be included in the labor force? how much can you want a job if you haven't seen fit to try for one in a YEAR?

No questions about benefits are included whatsoever. you can have been out of work for 10 years and still be u3. you can have never tried for benefits, been rejected, or used them all up. All you need to have done to be in the 6.6 is tried to find a job, even once, in a month.

I was out of work for 9 months in 2009. I kept track of my applications. They numbered 400. 1 a month I can MAYBE excuse if you have either an extremely specific trade or severe limitations on location range or job duties. 1 a year? You are just not trying.

EDIT - Worth mentioning the topic of this thread is not UE rates but initial claims. These refer to people just beginning an application for benefits, and of course are only one side of the issue since there is no equivalent weekly number of job gains. Even in the heyday of the late 90s hundreds of thousands of initial claims were filed weekly. It is a one sided measure of recent job losses and no more.

[DontTreadOnMe]

18. "two questions are asked"...

really, they come to your house and "ask"... oh, wait.. you have to "report not having a job..."

Do you realize how silly you sound?

The polar bears have to "report in" before they get on the endangered list... see how easy it is? If they don't "report in", well then that doesn't count as part of the facts.

Amazing what people call reality here on DU.

[JoePhilly]

15. If you want to argue about trends in UE, then you'll need to use the same method of calculation

that is always used.

You cannot just decide that you don't like that calculation, and then try to use some other number as a comparison point.

As for why the participation rate went down, you neglect to count retiring Baby Boomers. Of which there are many. They didn't give up, they just retired.

The fact is, UE has come down from about 10.2% to about 6.6%. Using the same method oc calculation that has always been used.

Now, I guess you can argue that things were better when it was an 10.2% and rising, if you want.

[DontTreadOnMe]

17. I have a bridge to sell you... I'll give you 6.6% interest rate.

"trends"... yeah.. keep believing "your" numbers if it makes you feel good. Most economists know they are bullshit numbers.

[JoePhilly]

20. Based on your math skills so far ...

I can already determine that (a) you could not pay me ANY rate of return, and (b) I doubt you could find a bridge, well without looking straight up maybe.



Also ... most economists don;t agree with you, they actually understand how the UE number is calculated, what it means, and what conclusions you can and can not draw from it. You'll notice that economists are not massing together demanding a new method of calculating this.

[DontTreadOnMe]

21. Based on how gulliable you are, you would believe I had a bridge in a paper bag...

"Will the Real Unemployment Rate Please Stand Up?"

http://jaredbernsteinblog.com/will-the-real-unemployment-rate-please-stand-up/

Obviously, the main problem with high unemployment right now is the joblessness for those looking for work and those who’ve given up for lack of opportunity, along with the absence of wage pressures for the millions of active workers who depend on tight labor market for the bargaining power they otherwise lack.

But there’s another big problem, one that’s more technical in nature: what is the unemployment rate?

If your answer is 6.7% as per the Bureau of Labor Statistics, you’re low-balling it. Because of the sharp decline in the labor force in recent years, that number provides a downwardly biased take on labor market slack. Estimating the magnitude of that bias happens to very important, because the tautness of the labor market as measured by the unemployment rate is a key policy input both at the Federal Reserve and Congress.

For example, the Fed has signaled that they view 6.5% as the jobless rate at which they’ll start thinking about raising the federal funds rate (the key interest rate they set to raise or lower the cost of borrowing; it’s been near zero for years). Well, if you believe the BLS number, they’re almost there. But if you think the official rate is biased down, the Fed is still some ways away from that target. (To be clear, none of this a criticism of the BLS, one of my personal favorite agencies.)

It’s as if your speedometer is off kilter such that when you’re driving 40 mph it says 60 mph. Under those conditions, you’d be likely to put on the brakes to slow down before you really wanted to.

A tiny bit of arithmetic will help here. Typically, the unemployment gap is thought off as u – u*, where u is the actual rate (6.7% right now) and u* is the lowest unemployment rate the economy can handle without triggering spiraling price growth, or the NAIRU (non-accelerating inflationary rate of unemployment). If you believe the CBO’s NAIRU of 5.5%, that gap is a not-all-that-big 1.2 percentage points (ppts) right now: 6.7-5.5=1.2

But something’s missing: a term to reflect the gap in labor force participation. That is, there’s considerably more slack in the job market than u – u* reveals, because a bunch of potential workers have given up looking for work and are thus not counted in ‘u.’ Another way of saying this is that u is biased downward. If that bias amounts to, e.g., 2% of the labor force, then u – u* should really be 8.7-5.5, or 3.2 ppts.

In other words, these days the proper slack equation is u + lfg – u* where lfg is the labor force gap (or, using the 2 ppts I just mentioned, 6.7+2-5.5).

(there is more detail in this reference above)