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Thu Jun 11, 2020, 08:06 PM

A Word About the Chaos in the Unemployment Data: Week 12 of the U.S. Labor Market Collapse

A Word About the Chaos in the Unemployment Data: Week 12 of the U.S. Labor Market Collapse
by Wolf Richter • Jun 11, 2020 •

No one was prepared for a collapse like this. The data are all over the place. Two government agencies differ by 9 million unemployed. The jobs crisis bottomed in May. But “over 30 million” people remain without work. Making sense of the chaos.
By Wolf Richter for WOLF STREET.


Even Fed chairman Jerome Powell, in his FOMC-meeting news conference yesterday, expressed his bafflement with the chaos in the unemployment data being reported by two government agencies that differ by give-or-take 9 million unemployed, which is huge:

• The Department of Labor reported this morning that 29.5 million people were receiving state or federal unemployment insurance benefits (not seasonally adjusted).

• The Bureau of Labor Statistics reported last Friday in a shock-and-awe data set that only 21 million people were unemployed based on household surveys, though it acknowledged a shock-and-awe systematic error and that without this error, it would have reported 25 million as unemployed.


These are huge differences! I believe the main issue isn’t political meddling but that this collapse of the labor market was so massive and so fast with such huge numbers under such extraordinary circumstances, that the normal procedures for tracking unemployment essentially malfunctioned.

.....(snip).....

So there are three points I want to conclude with:

This unemployment crisis appears to have bottomed out in May. While many more people are still losing their jobs, and will continue to lose their jobs, others are being rehired, and the net total in terms of numbers of UI beneficiaries is now declining. This is the second week in a row that we have seen this overall decline.

It’s even worse than it looks. The total number of people who have lost their work – employees and gig workers – and who are still out of work must be above the 29.5 million insured unemployed because many people don’t qualify for any benefits. I don’t know where this final number is, but it is likely well above 30 million. ..............(more)

https://wolfstreet.com/2020/06/11/a-word-about-the-chaos-in-the-unemployment-data-week-12-of-the-u-s-labor-market-collapse/




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Reply A Word About the Chaos in the Unemployment Data: Week 12 of the U.S. Labor Market Collapse (Original post)
marmar Jun 11 OP
stopbush Jun 11 #1
progree Jun 11 #3
captain queeg Jun 11 #2
progree Jun 11 #4
Maeve Jun 12 #5
sandensea Jun 12 #6


Response to stopbush (Reply #1)

Thu Jun 11, 2020, 08:59 PM

3. 43 Million is the sum of initial claims for unemployment benefits for the last 11 weeks

https://www.businessinsider.com/us-weekly-jobless-claims-preview-economists-forecast-millions-unemployment-insurance-2020-6
In the previous week, 1.9 million Americans filed for unemployment insurance, bringing the 11-week total to nearly 43 million.


Whereas continuing claims in the latest week available, week ending May 30 was S.A. 20.929 million seasonally adjusted (18.920 million not seasonally adjusted). https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20201216.pdf

Continuing claims are claims in their second or later week, i.e. all claims except those in their first week.

One big difference is that some of the 43 M found jobs and some dropped out of the unemployment insurance system for other reasons (e.g. quit looking for work or otherwise did not follow the rules).

But anyway, I know of no economist that uses the sum of initial claims for the past 11 weeks as an estimate of the number of unemployed.

Though like Wolf Richter enumerates in his OP, the unemployment insurance numbers of all varieties (and Friday's BLS jobs report of the unemployed / unemployment rate -- even after correcting for that embarassing mistake they've admitted have occurred 3 months in a row) leave out a lot of unemployed people who want to work.

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Response to marmar (Original post)

Thu Jun 11, 2020, 08:19 PM

2. The govt has been cooking the books since before the crisis. The statistics now are

Unrealistic, unless you drill down and check all the parameters. It’s not what most people would consider a representation of unemployment.

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Response to marmar (Original post)

Thu Jun 11, 2020, 09:34 PM

4. This puts it all together and explains it better than anything I've read by far

and I've read a ton of posts and articles since the Friday jobs report came out. This OP and of course reading the full article is essential.

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Response to marmar (Original post)

Fri Jun 12, 2020, 08:53 AM

5. A good, clear expalnation--thank you for posting this

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Response to marmar (Original post)

Fri Jun 12, 2020, 06:17 PM

6. Cooking the books

Second nature to His Orangeness.

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