Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Are the media mentioned above deliberately deceiving investors as to the initial claims for unemployment compensation during the week of January 14, 2012? Secretary of Labor Hilda Solis’s Bureau of Labor Statistics reported that seasonally adjusted initial claims were 352,000, a decrease of 50,000 from the previous week’s revised figure of 402,000. This was the data reported by CNBC TV, Bloomberg TV, and Fox business channel on January 19, and by the Wall Street Journal and the New York Times and other print media on January 20. Readers will recall that we reported last week an incredible difference between the seasonally adjusted and actual data. We reported:
"In the week ending January 7, the advance figure for seasonally adjusted initial claims was 399,000, an increase of 24,000 from the previous week's revised figure of 375,000. The 4-week moving average was 381,750, an increase of 7,750 from the previous week's revised average of 374,000." Most reporters evidently did not go one to read the report itself. If they did they would have been amazed to find that the actual number of initial claims filed amounted to 642,381, 143,381 higher than the seasonally adjusted number. The difference is so great that it requires an explanation from the BLS. But none has been forthcoming."
The data for the week ending January 14 was not as dramatic. The actual number as did the seasonally adjusted declined but the difference was still substantial and requires an explanation.
The same report in which the BLS reported the seasonally adjusted data also reported the actual number of claims and the total number receiving unemployment compensation but the media did not report it.
"The advance number of actual initial claims under state progra ms, unadjusted, totaled 521,613 in the week ending January 14, a decrease of 124,606 from the previous week. There were 549,688 initial claims in the comparable week in 2011.
"…The advance unadjusted number for persons claiming UI benefits in state programs totaled 4,076,626, a decrease of 84,257 from the preceding week. A year earlier, the rate was 3.7 percent and the volume was 4,652,805.
"The total number of people claiming benefits in all programs for the week ending December 31 was 7,826,665, an increase of 493,566 from the previous week." (italics mine)
Neither the actual number of claims filed nor the actual number of those receiving unemployment compensation were reported by the media mentioned above. The meaningful data for investors is the actual number of initial claims filed and the change in the total number of those receiving unemployment compensation. The latter increased by nearly a half million. The seasonally adjusted number of initial claims ought to be relegated to a footnote. Its usefulness is that it might suggest that the number of claims filed is “normal” or “abnormal”. No attempt is made by the BLS to explain the actual data as either normal or abnormal.
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