Official unemployment claims improve, but…

Earlier this week I reported the unemployment picture as calculated by ADP, the nation’s largest payroll firm. Today the U.S. Department of Labor reported that initial jobless claims fell by 5,000 to 457,000. This marks the 5th week in a row that claims have fallen. The four week moving average is a decline of 14,250 to 481,250. That figure represents the lowest since November of last year.

But while the number of initial claims improved, the number of people who have been seeking work for longer than a week worsened. Specifically they rose by 28,000 to 5,465,000.

Why this is interesting:

Interestingly, the media this morning are hyping the improvement in initial claims. Yes, the news is not bad (notice I didn’t say good), but initial jobless claims are not nearly as important as ongoing claims. Why? For starters, most people do not find work within one week of losing their jobs as evidenced by the rise in the “ongoing claims” figure. Secondly, just look at the magnitude difference between the ongoing claims and the initial claims. The ongoing claims are over 10x larger! Without a change in this figure the unemployment rate will not improve. Duh!

Jason