Inquisitive minds reflect on the discrepancy between the employment report and the Department of Labor’s unemployment claims.
Job bounce
Earlier today, I commented on Jobs Bounce for 4.8 million, but huge headwinds remain
I question both the strength of the increase in jobs and the decrease in the unemployment rate according to the claims data and the reference week.
Reference week
The week of the household survey that sets the unemployment rate is the week that contains the 13th of the month.
Some claims data released today is for the week ending June 13, but first let’s look at the main chart.
Continuing claims of state unemployment in 2020
Ongoing claims have shown little improvement for five weeks. On May 16, continuing claims were $ 20,841 million. There were 19,290 for the week ending June 20 and 19,231 million on June 13.
These are seasonally adjusted numbers, and have increased since last week.
State claims are the best single point of reference. Those claims represent individuals eligible for unemployment at the state level.
Primary PUA claims
When Covid-19 came up with various federal unemployment compensation schemes, especially PUA.
People are eligible for PUA based on loss of income and part-time forced labor. So not everyone in PUA is technically unemployed, but some are.
The numbers in boxes correspond to the reference weeks for this report and the last one.
All claims continuous
All ongoing claims include primary PUA claims and emergency PUA claims plus various federal programs.
All ongoing claims and PUA claims are not seasonally adjusted.
Total up to
It is difficult to know how many PUA claims represent people working 0 hours, but the answer is somewhere between 20 million and 30 million.
Note that all claims and PUA claims reached new records and both increased from the previous reference week setting the unemployment rate.
Unemployment vs. claims in the reference week of June 13
- Unemployed: 17,750 million
- Ongoing state claims: $ 19,231 million
- All claims: 31,491 million
The discrepancy between continued state claims and the number of unemployed is 1,481 million.
And that doesn’t count those in PUA who are genuinely unemployed.
Is the difference entirely fraud?
Part-time jobs
- Total part-time job change: -1,571,000
- Involuntary part-time work: -1,605,000 – Household survey
- Part-time volunteer work: +2,743,000 – Household survey
Part-time job discrepancy
Supposedly, part-time voluntary employment has increased by 2,743 million and involuntary part-time employment has decreased by 1,605 million.
That translates to an increase in total part-time employment of 1,138 million, except that the BLS says that total part-time employment decreased by 1,571 million.
These numbers are never net due to how BLS determines them, but the discrepancy is 2,709 million.
Unlike others, I don’t think the BLS does any of this on purpose, but Covid has ruined a lot of things, including the infamous birth and death model and seasonal adjustments.
Model of birth and death
The birth and death model refers to the birth and death of companies. In a normal economy, more businesses are created than closed. The BLS adds or subtracts a net number of jobs based on their models.
I think the models don’t make sense now, but I can’t test it, nor will anyone else until we have massive reviews next March.
My opinion is that a record number of businesses closed or will close due to Covid-19. Some of those people may have found another job, and if so, they are counted twice. Others were numbered when they shouldn’t be.
Looking to the future
Statewide continuous claims, PUA claims, and total claims increased last week.
Reverse reopens
It is important to note that the reopens are inverses and that is not reflected in any of these data.
Governors in Washington, California, Florida and Texas have halted or reversed all reopens.
Alaska, Arizona, California, Georgia, Idaho, Oklahoma, South Carolina, Tennessee and Texas reported record single-day levels of new Covid-19 cases on Wednesday.
Hospitals in some regions are overwhelmed with patients. Expect more reversals.
The Fed promotes acceleration that takes many years
Finally, the Fed openly admitted an acceleration that takes many years
There will be no V-shaped recovery. Instead, the recovery will take many forms, sector by sector.
Mish
