Mixed Progress for Jobless Claims
States reported 5.35 million people claiming Emergency Unemployment Compensation benefits for the week ending Jan. 9, the latest week for which data is available, a decrease of 304,067 from the prior week. EUC is a federal program that provides benefits to individuals who have exhausted regular state benefits. A year ago, 1.77 million Americans were EUC claimants.
Snapshot of the Future
Regarding jobless claims, economists view the four-week average as a better indicator of unemployment conditions because it smooths-out anomalies for strikes, holidays, or other idiosyncratic events.
Economists also monitor continuing claims because that stat provides a snapshot of how long it's going to take the typical person to find comparable employment once he or she has lost a job. In general, continuing claims above 3 million reflect a slack labor market and point to extended 6- to 9-month (or longer) job searches.
The largest increases in initial jobless claims for the week ending Jan. 16, the latest week for which data is available, were in California, 43,738; Florida, 2,345; West Virginia, 1,460; Iowa, 937; and Puerto Rico, 415. The largest decreases were in: Pennsylvania, -25,819; New York, -22,173; North Carolina, -17,265; Wisconsin, -13,614; and Georgia, -12,452.
Also, the highest insured unemployment rates for the week ending Jan. 9, the latest week for which data is available, were in Alaska, 7.4%; Oregon, 6.8%; Wisconsin, 6.6%; Idaho, 6.4%; Michigan, 6.4%; Montana, 6.0%; Pennsylvania, 6.0%; Nevada, 5.7%; Connecticut, 5.5%; North Carolina, 5.5% and Washington state, 5.5%.
A Problem to Be Watched
The key takeaways from this week's report are the unexpected rise in the four-week moving average, offset by the steady, impressive decline in continuing claims. The four-week moving average rise is a problem and has to be watched.
The calculation here argues that it will resume its decline in the weeks ahead. If it doesn't, that would be a sign of a renewed rise in layoffs -- a troubling sign for labor markets and the U.S. economy.