New Jobless Claims: Thunderdome Edition

Townhall.com ^ | May 4, 2012 | Political Calculations

[Kaslin]

Previously, we advanced two possible hypotheses that might explain what is currently happening with the number of seasonally-adjusted initial unemployment insurance claim applications being filed in the U.S. each week:

1. The number of new jobless claims filed each week is in the process of leveling out somewhere between 370,000 and 380,000, which is about 60,000-70,000 higher than the typical levels that were recorded before the December 2007 recession began.
2. Rising oil and gasoline prices in the U.S. have derailed the most recent falling trend in new jobless claims, and a new, negative trend has begun where the number of claims filed each week is rising.

In that post, we indicated that we might not know which hypothesis was correct until sometime this summer. But that was before the U.S. Bureau of Labor Statistics released its initial estimate of the number of new jobless benefit claim filings on Thursday, 26 April 2012. Now, it is very possible we might know the answer as early as this upcoming Thursday, 3 May 2012.

We've updated both charts showing our two hypotheses to incorporate the data as it stands as of the BLS' 26 April 2012 report. The first chart illustrates our first hypothesis:

In this chart, we would seem to be realizing our first hypothesis, in that the indicated trend, which we've identified as Trend I, is in the process of flatlining.

Now take a closer look. Focusing in on the data from 4 February 2012 through 31 March 2012, we see that the mean trend line for all data reported since 3 December 2011 has shifted in the past week so that all but one of these data points are below the line.

Following the well-established rules developed by Western Electric over half a century ago to determine whether or not an existing trend has broken down after having been in statistical equilibrium, which are visually depicted in the bell-curve image (it's not there for decoration!), we find that all it would take for us to declare this hypothesis to be false is for the most recent data, for the week ending 21 April 2012, to be revised upward by more that 2,000 claims, as the resulting change in the mean trend line will place the data for these nine consecutive weeks below it.

If the BLS keeps to its recent track record, it will definitely be revising the number of new jobless claims recorded for the week ending 21 April 2012 upward when it revises its data for that week this Thursday, 3 May 2012 - the only question is by how much.

Our second chart shows what the new trend would look like at this point in time:

This Thursday, our two hypotheses regarding the current trend in new jobless benefit claim filings will enter the theoretical Thunderdome, and very possibly, only one will leave. Stay tuned!

[kiryandil]

You needn’t be so self-critical...

[PA Engineer]

You do seem to have an interesting history on FR.

[zeestephen]

It does a monthly “Household Survey” of about 60,000 homes.

From that survey, and from other data like unemployment claims, the government estimates the total number of people working and the total number not working BUT looking for work.

They compute the “unemployment rate” based on those two numbers.

[Toddsterpatriot]

It’s true, I’ve pointed out Williams’ idiocy before.

[kiryandil]

He's probably been banned before, too.

I remember seeing that, and laughing. Toddy gets so carried away with his own "wit" mostsometimes that he shoots his yap off to the wrong people.

It was a nice, quiet four months, with minimal incompetent verbal diarrhea on the economic threads. Unfortunately, Toddy's timeout is over now. :-)

[1rudeboy]

As a practical question, how does the government count the people who are not receiving unemployment benefits? There are no people getting a check, so how do they keep track of people no longer in the system?

Please check the link to the FAQ's I posted in my #13, that started the parade of my admirers.

I'm not going to let a bunch of loud-mouths keep me from helping you to understand that unemployment compensation has nothing to do with the calculation of the unemployment rate. And to summarize, it's because not everyone is eligible for it.

So, if you are looking for a statistical snapshot of the population, in order to be scientifically valid you cannot limit the population you survey in that way (again, for reasons the BLS discusses in #13).

Well, you always could, but you would introduce bias. Now, that is completely a separate issue from the other ways that the BLS introduces bias into the calculation of the unemployment rate. But you shouldn't complain about oranges by talking about apples.

[1rudeboy]

Hey, have you heard if that Anti-FReeper website is running its “Most Popular” contest this year? I have a title to defend.

[1rudeboy]

And Willie took the choo-choo to Nowhere Land. And your other favorite FReeper took to posting about mindwaves, comets, and UFO's. Tough times for you indeed . . . I wonder what other economic forums you post on? Not likely any that have to do with liberty.

[1rudeboy]

By the way, a lot of the regulars have gotten suspended. There can’t be that many of them that think it’s a big deal. It’s the people who re-register, or register multiple accounts so that they can “hide” that are homos.

[zzeeman]

Which households are they calling? When are they calling them? Where are these households located? What exactly are these households being asked? Who’s doing the answering? What biases are inserted by those doing estimating?

Exactly, those and other questions about the statistical massaging done after they collect the survey “data,” all point up how this (U3 or other) number is just a SWAG that can be polished to be basically anything that is desired at a given point in time. I would suspect that close to 95% of people in this country think/believe that the widely reported U3 “number” is based upon some type of an actual count or accumulation of real “data” (with the vast majority believing that UE claim data makes up some substantial part of it).

Of course, the PTB like it that way. Keep 'em in the dark and feed 'em BS.

[kiryandil]

LOL! You shouldn't drink and post, rude.

You know nothing about me, but I've seen your garbage on FR for way too long.

Of COURSE a snotty, know-nothing reprobate like Toddy would be one of your comrades-in-arms.

As for Willie Green - I remember him, but he was never one of my comrades. BTW - I consider you to be a FR Johnny-come-lately... **snicker**

[kiryandil]

By the way, a lot of the regulars have gotten suspended.

The ones who forgot that this is a Constitutionalist site. That's why I've never been suspended.

You & Toddy - apparently you forget from time to time.

[kiryandil]

Abbott and Costello explain unemployment

Basically, guys like rude don't want you to believe your own lying eyes:

COSTELLO: I want to talk about the unemployment rate in America.

ABBOTT: Good "subject". Terrible "times". It's about 9%.

COSTELLO: That many people are out of work?

ABBOTT: No, that's 16%.

COSTELLO: You just said 9%.

ABBOTT: 9% Unemployed.

COSTELLO: Right 9% out of work.

ABBOTT: No, that's 16%.

COSTELLO: Okay, so it's 16% unemployed.

ABBOTT: No, that's 9%...

COSTELLO: WAIT A MINUTE. Is it 9% or 16%?

ABBOTT: 9% are unemployed. 16% are out of work.

COSTELLO: If you are out of work you are unemployed.

ABBOTT: No, you can't count the "Out of Work" as the unemployed.  You have to look for work to be unemployed.

COSTELLO: But ... they are out of work!

ABBOTT: No, you miss my point.

COSTELLO: What point?

ABBOTT: Someone who doesn't look for work, can't be counted with those who look for work. It wouldn't be fair.

COSTELLO: To who?

ABBOTT: The unemployed.

COSTELLO: But they are ALL out of work.

ABBOTT: No, the unemployed are actively looking for work...Those who are out of work stopped looking. They gave up. And, if you give up, you are no longer in the ranks of the unemployed.

COSTELLO: So if you're off the unemployment roles, that would count as less unemployment?

ABBOTT: Unemployment would go down. Absolutely!

COSTELLO: The unemployment just goes down because you don't look for work?

ABBOTT: Absolutely it goes down. That's how you get to 9%. Otherwise it would be 16%.  You don't want to read about 16% unemployment do ya?

COSTELLO: That would be frightening.

ABBOTT: Absolutely.

COSTELLO: Wait, I got a question for you. That means they're two ways to bring down the unemployment number?

ABBOTT: Two ways is correct.

COSTELLO: Unemployment can go down if someone gets a job?

ABBOTT: Correct.

COSTELLO: And unemployment can also go down if you stop looking for a job?

ABBOTT: Bingo.

COSTELLO: So there are two ways to bring unemployment down, and the easier of the two is to just stop looking for work.

ABBOTT: Now you're thinking like an economist.

COSTELLO: I don't even know what the hell I just said!

[1rudeboy]

There was a FReeper, long before your time, who would spam threads when they were losing an argument. (Not that we’re having an argument, here—I simply posted some facts). Out of respect for the deceased, I will not mention her name. You, on the other hand, need some anti-menopausal medication.

[kiryandil]

I guess you're entitled to your own facts.

BTW - the above wasn't spam, it was mockery. There were those who were good at it, before your time. :-)

[1rudeboy]

Sorry, sweetheart. Unemployment compensation has nothing to do with the way the unemployment rate is calculated, despite whatever fiction you write. Fact.

[kiryandil]

Ah, my little sweet-cheeked darling rude changes the subject again.

Here's what we were talking about, meine kleine hübschling:

The unemployment rate depends heavily on the labor participation rate.

Here is an actual Fed economist on the subject (not some anonymous Interwebs sniper with an unknown agenda):

"Interpreting the Recent Decline in Labor Force Participation" - Willem Van Zandweghe (in the Economic Review of the Federal Reserve Bank of Kansas City. )
http://www.kc.frb.org/Publicat/EconRev/PDF/12q1VanZandweghe.pdf

Published 1st quarter, 2012.

Your eyes flash beautifully when you're angry, rudey. But don't worry your pretty little head about it. You might catch on eventually if you think about it long enough.

[Toddsterpatriot]

The unemployment rate depends heavily on the labor participation rate.

http://www.freerepublic.com/focus/news/2879786/posts?page=13#13

LOL!

[Jay Santos CP]

At this point, any numbers from the federal government should be ignored. The administration is a fraud. They will lie about absolutely anything and everything.

They will lie about economic numbers without hesitation.

[1rudeboy]

If you simply went back and re-read my #13 completely, you wouldn't be yammering about subjects being changed. I will tell you this, though, it's pretty darn clear you know you are arguing a point that is not in dispute.

I'll post the "summary" of my #13 again:

the government keeps track of the number of folks receiving UI. It results in the numbers reported as "initial claims" and "continuing claims." Those two numbers stand alone from the "unemployment rate" (U-3 or otherwise). The "labor force participation rate" (which is the primary method to massage the U-3 number) also has nothing to do with the number of folks receiving or not receiving UI. [emphasis added]

Pay particular attention to the italicized portion. It is what set you off. It's odd that you think the subject is something different a day later.