Initial claims for unemployment compensation extended the string of record lows into its 22nd month this week. The mainstream media is reporting this as if the record low is something new. That's because they look at the seasonally adjusted (SA) fictitious data only. The actual, not seasonally finagled number has been at a record low relative to total employment since September 2013.
However, it is remarkable that the SA total is at its lowest level since 1973, when the work force was far smaller than today. The current numbers are well beyond the bubble record lows of 1999-2000 and 2006-07. The implication is that this time really is different. It is the bubble to end all bubbles.
The headline, fictional, seasonally adjusted (SA) number of initial unemployment claims for last week came in at 255,000. The Wall Street economist crowd consensus guess was too high at 279,000. They had merely shaved a few hairs off the tail on the donkey of the previous week's number of 281,000.
The stock market sold off on the correct expectation that the data would encourage the Fed to engage in the game of interest rate raising charade sooner rather than later. This isn't news to us, since the hard, unmanipulated economic data we track has never deviated from the slow growth trend it has been on for the past couple of years. The Fed knows that, but the mainstream media headline writers and press release repeaters, along with the investing public, are constantly whipsawed by the month to month, often misleading or outright wrong squiggles in the fictional SA data.
Permit me to get on my anti-seasonal adjustment soapbox for a moment here. The seasonal adjustment factor applied this week is just silly, so I can't blame the Wall Street crowd for being so far off the mark in its current guess. Their guess was probably more correct than the official number. Here's why. The factor applied this week was 0.965. This week of July is always a week where actual claims filed are extremely low and down sharply from the prior week. Why would the DoL further reduce the number by using a factor of less than 1.0? In fact, the factors applied for the comparable week from 2012 to 2014 were 1.07, 1.03, and 1.01. These numbers are based on an arbitrary statistical formula, but at least those factors make some sense. Reducing the weekly number for this week by applying a factor of 0.965 does not. In reality, the actual number of claims filed this week was perfectly consistent with the trend which claims have been on.
Instead of the seasonally manipulated headline number expectations game, we focus on the trend of the actual data. Facts are much more useful than the Wall Street captured media's fantasy numbers. Actual claims based on the actual state by state filings reported to the Department of Labor (DoL) were 262,981, which is another record low for this calendar week, continuing a nearly uninterrupted string of record lows that began in September 2013. There's just no news here, no big surprise.
