Sunday, March 18, 2012

Weekly Initial Unemployment Claims

Weekly Initial Unemployment Claims - 4 week moving average.

Economists love the weekly initial unemployment claims figure. The number one reason: it is an an actual, real number representing real people which is gathered from state employment offices. It is not an estimate, nor a forecast or a guess. It is the real number of people who applied for the first time unemployment benefits. Second, it is weekly. Weekly is a very frequent release in the world of economics. Compare that to the GDP which comes out once a quarter then get's revised. Or the national unemployment rate which is produced monthly. CPI-U, also monthly. And all three are estimates based on samples. Look at how the reported Black unemployment rate has been jumping around the past three months. A number should not depend on who was answering the telephone that day.

Employment is a lagging indicator but weekly initial unemployment claims responds quickly to economic changes. A lot of forecasting models use weekly unemployment claims number. And if you ever want to know what the coming unemployment rate for next month then just look at the week claims for the previous three months.

Note: the rate is currently close to or below 350,000 claims per month. Below 350K, economists believe the economy adds enough jobs to reduce the national unemployment rate.


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